Benchmark indices ended nearly 1 per cent lower on Wednesday, tracking a weak trend in global markets and continuous foreign fund outflows.
The 30-share BSE Sensex fell 509.24 points or 0.89 per cent to settle at 56,598.28.
During the day, it tanked 621.85 points or 1.08 per cent to 56,485.67.
Similarly, the broader NSE Nifty declined 148.80 points or 0.87 per cent to end at 16,858.60.
Among the 30-share Sensex pack, ITC, Axis Bank, Reliance Industries, Tata Steel, IndusInd Bank, State Bank of India, HDFC and HDFC Bank were the major laggards.
Asian Paints, Sun Pharma, Dr Reddy's and Power Grid were among the winners.
Elsewhere in Asia, markets in Seoul, Tokyo, Shanghai and Hong Kong ended sharply lower.
Stock exchanges in Europe were trading lower in mid-session deals.
"Investors continue to be sceptical of the domestic market's higher premium amid the ongoing global deceleration while foreign investors are fleeing emerging economies in search of safer havens.
"Although the domestic economy is buoyed by solid fundamentals, the stock market's appetite for risk has been hindered by the rising worries of a worldwide recession," Vinod Nair, head of research at Geojit Financial Services, said.
Meanwhile, the international oil benchmark Brent crude dipped 0.08 per cent to $86.20 per barrel.
Foreign institutional investors offloaded shares worth Rs 2,823.96 crore on Tuesday, according to data available with BSE.