Growing concerns about slowing growth in China and a mixed bag of corporate earnings also hit investor sentiment, pulling down rupee below 63-level against dollar.

A slump in emerging-market currencies, spurred concerns a sell-off in global equity markets may continue, brokers said.

Overall, 643 shares gained while 1,952 stocks declined on the BSE -- meaning seven out of every ten stocks ended lower.

All 12 BSE sectoral indices ended in the red. Rate-sensitive realty, banking, metal and auto were among the hardest hit.

After dropping 240 points in the previous session, the BSE benchmark Sensex plunged by 426.11 points, or 2.02 percent to end at 20,707.45, its biggest single-day fall since September 3, 2013 when it sank by over 651 points.

ICICI Bank and HDFC Bank led the 27 losers in 30-share Sensex lower. Tata Motors and Tata Steel plunged by over 6 percent each.

Over 100 stocks on the BSE hit their 52-week lows. Seeking to assuage investors worried over declining value of the rupee and falling stock markets, the Finance Ministry today said India's economic fundamentals are "very strong" and there is no cause for concern.

The 50-share National Stock Exchange index Nifty dropped by 130.90 points, or 2.09 percent, to end at 6,135.85, after touching an intra-day low of 6,130.25.

"Weak international cues and rising USD/INR rates are among some key factors that are triggering selling pressure in Indian markets.

Uncertainty is also created by upcoming events such as RBI policy meeting and FOMC meeting," said Milan Bavishi-Head Research, Inventure Growth and Securities.

Sectorally, the BSE Banking sector index dropped by 3.97 percent. However, the biggest loser was the Realty sector index which slipped 6.82 percent. The Metal index slid 3.81 percent and Auto index lost 3.33 percent.


Latest News  from Business News Desk