The Sensex opened with a negative gap of 22 points at 6,629, which nearly turned out to be the high for the day. Sustained selling across-the-board saw the index plunge to an intra-day low of 6,335 - a drop of 316 points from the previous close.
Renewed buying at lower levels saw the index finally close with a loss of 2.89% (192 points) at 6,459. The Nifty closed at 2,032, down 72 points.
While 29 index scrips declined with a volume of 2.35 crore totalling Rs 1,158 crore, one (Gujarat Ambuja) advanced with a volume of five lakh for Rs 20 crore.
Marketmen said the fall in the share prices was extended to all the segments as major participants preferred to book profits at such high levels captured in last few trading sessions.
They said the selling was purely a much-awaited technical correction and considered to be favourable for a healthy capital market.
A major fall in technology stocks was on the back of a weak trend in the US tech index - Nasdaq - and influenced trading at opening of Asian markets, they added.
Brokers also attributed the dramatic sell-off to a warning by global rating agency Standard & Poor's that India's widening fiscal deficit was a cause of concern.
The rating agency warned that the country was unlikely to sustain high growth if the current high fiscal and debt burden continued.
Foreign Institutional Investors which had pumped in $9 billion in the Indian bourses, taking the Sensex to life-time peaks, suddenly turned nervous and resorted to stop-loss sales.
The sell-off was so intensive that all the sectors felt the heat, brokers said.
Heavyweights were dumped today. SBI plummetted nearly 5% (Rs 32) to Rs 617. Infosys lost nearly 2% (Rs 36) to Rs 2,052. ITC was down 2% (Rs 29) at Rs 1,285. ONGC declined 3.6% (Rs 30) to Rs 798. HLL was down Rs 2 at Rs 145, and Reliance was down a rupee at Rs 530.
Tech, auto, pharma, cement and power scrips finished on an extremely weak note.
While Wipro tanked 6% (Rs 43) to Rs 706, Satyam lost 5% (Rs 21) to Rs 390.
Hero Honda slipped 7% (Rs 45) to Rs 566. Bajaj was down 4% (Rs 43) at Rs 1,088. Maruti also lost nearly 4% (Rs 17) to Rs 446, and Tata Motors dropped 3% (Rs 16) to Rs 504.
Dr. Reddy's declined 3% (Rs 23) to Rs 822. Ranbaxy was down 2% (Rs 26) at Rs 1,209.
Grasim dropped 3% (Rs 38) to Rs 1,303. ACC was down Rs 3 at Rs 348. Gujarat Ambuja, however, was a notch higher at Rs 426.
BHEL slipped 3% (Rs 22) to Rs 755. Reliance Energy declined 3% (Rs 15) to Rs 540. Tata Power was down 4% (Rs 16) at Rs 387.
Bharti dropped 7% (Rs 16) to Rs 210. Hindalco lost more than 4% (Rs 57) to Rs 1,367. HPCL was down more than 5% (Rs 21) to Rs 392. Zee declined 4% (Rs 7) to Rs 170.
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