The Sensex opened with a positive gap of 133 points at 11,072. The index touched a high of 11,143, but soon slipped into the negative zone.
At 11:56 am the Sensex crashed by 1112 points to 9,827. The Nifty was down 350 points at 2896.
The bloodbath at the markets ended with the Sensex losing 457 points to close at 10,482.
The crash followed a statement by Central Board of Direct Taxes seeking to dispel suggestions that its draft circular was ambiguous.
The worst ever crash coincided with the second year anniversary of the Congress-led
Analysts across the board said further slide was likely, while expressing surprise at the magnitude of the fall.
"Rumours of many brokers not being able to honour their payments has also led to the crash," analysts said, adding that all were stuck up in a big payment crisis and are trying to meet their obligations.
A private security guard walks past a billboard symbolic of the May 22 stock market crash.
Photograph: Indranil Mukherjee/AFP/Getty Images
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