The benchmark BSE Sensex today crashed by over 514 points to end at nearly 6-month low of 26,305 while the Nifty cracked below 8,200 mark on concerns about outflows amid surging US yields and the dollar gathering more steam.
Currency market was hit hard, with the rupee down 57 paise to a five-month low of 67.82 against the US currency during the day.
Sentiment continued to be weighed down by the government's move last week to withdraw high-value currency notes and disappointing quarterly earnings by some more blue-chip companies, brokers said.
In a surprise move, the government had banned Rs 500 and Rs 1,000 currency notes in a bid to curb black money.
The Sensex opened lower at 26,809.61 and dropped further before ending down 514.19 points, or 1.92 per cent, at 26,304.63, a level last seen on May 25. It had lost 698.86 points on Friday on worries that US President-elect's Donald Trump's impending reforms may spark outflows from emerging markets (EMs).
The NSE Nifty fell sharply by 187.85 points, or 2.26 per cent, to 8,108.45, its lowest closing since June 27 when it settled at 8,094.70. Intra-day, it cracked below the 8,100-mark to hit a low of 8,093.20.
Persistent capital outflows from EMs amid all major Asian currencies declining against the US dollar since Trump's shock win in the US presidential election on November 8 was another factor behind the big plunge on the domestic bourses.
For the second consecutive month of decline, wholesale inflation eased to 3.39 per cent in October, data showed today.
Meanwhile, government data released on Friday showed that industrial production grew a meagre 0.7 per cent in September, mainly due to poor show by manufacturing and mining sectors coupled with decline in capital goods output.
Both the stock exchanges, BSE and NSE, remained closed yesterday on account of Guru Nanak Jayanti.
Malaysia's ringgit and South Korea's won lost at least 2.8 percent each. A gauge of the greenback erased its losses this year as US Treasury yields surged on speculation that Trump's pro-growth policies would boost inflation and push interest rates higher.
The broader markets too remained under pressure, with the BSE small-cap index slumping 4.67 per cent and the mid-cap 3.91 per cent.
However, when all the sectors fared poorly, only BSE IT index managed to keep its head up, logging gains of 0.30 per cent. This uptick was fuelled by buying in Wipro, TCS and Infosys, rising by up to 1.27 per cent.
Tata Motors was the biggest loser from the Sensex pack on the day -- sinking 9.88 per cent to Rs 457.25 after the company's standalone net loss widened to Rs 631 crore in the September quarter.
Meanwhile, foreign portfolio investors (FPIs) sold sharesworth a net Rs 1,493.27 crore last Friday, as per provisional data.
Other Asian markets also finished lower as Japan's Nikkei fell by 0.03 per cent while Shanghai Composite was down 0.11 per cent. European stocks, however, were a shade higher in their early deals as the US dollar stood at an 11-month high. Key indices in the UK, France and Germany rose by up to 0.88 per cent.
(With PTI inputs)