Benchmark Sensex dropped 334 points on Monday due to intense selling pressure in metal and power stocks as FII outflows dampened investor sentiment.
Besides, a sharp decline in the rupee against the US dollar also put pressure on domestic equities, traders said.
After losing nearly 500 points, the 30-share BSE index recovered some lost ground to settle at 334.98 points or 0.55 per cent lower at 60,506.90.
During the session, the index touched its intra-day low of 60,345.61.
The broader NSE Nifty dipped 89.45 points or 0.50 per cent to end at 17,764.60 as 34 of its stocks dropped.
Tata Steel was the biggest loser in the Sensex pack, falling 2.08 per cent, followed by Kotak Bank, Infosys, ICICI Bank, M&M, Ultra Cement and Tata Motors.
On the other hand, IndusInd Bank, Bajaj Finance, PowerGrid and ITC were among the major winners.
Adani group stocks, except for Adani Ports, continued to decline due to weak investor sentiment after US-based activist short-seller Hindenburg Research made a litany of allegations.
Adani Ports and Special Economic Zones Ltd gained 9.46 per cent after the group said that the promoters will pre-pay $1,114 million for the release of pledged shares of its firms ahead of the maturity in September 2024.
In the broader market, the BSE midcap gauge rose 0.75 per cent and smallcap index gained 0.49 per cent.
Elsewhere in Asia, equity markets in Shanghai and Hong Kong ended in the red, while Tokyo and Seoul settled higher.
Equity exchanges in Europe were trading lower in mid-session deals.
Markets in the US ended in the negative territory on Friday.
International oil benchmark Brent crude rose 0.09 per cent to $80.01 per barrel.
Foreign Institutional Investors (FIIs) offloaded shares worth Rs 932.44 crore on Friday, according to exchange data.