Brokers said the across-the-board selling was also triggered by reports that Standard & Poor's sees chances of a credit rating downgrade for India higher than for Indonesia.
The bloodbath in stock markets saw investors becoming poorer by a whopping Rs 1.63 lakh crore as nearly 1,500 stocks on the BSE platform ended the trade as losers.
After gaining 918 points in last four sessions, Sensex plunged by 651.47 points, or 3.45 percent to 18,234.66, after hitting day's low of 18,166.17. Today's fall was the biggest after August 16, when it lost 769 points.
On similar lines, the NSE index Nifty tumbled by 209.30 points, to 3.77 percent to 5,341.45, after touching a low of 5,323.75. The MCX-SX's SX-40 was down 3 percent at 10842.41.
Reports quoting Russian news agencies said the country's missile early warning system had detected the launch of two missiles from the central part of the Mediterranean Sea fired towards the Sea's eastern coastline, amid growing fears of Western military action in Syria.
Domestic markets were also weighed down after Goldman Sachs lowered India's growth forecast for the current fiscal to 4 percent from 6 percent earlier and is expecting the rupee to touch 72 against the US dollar in next six months.
Banks were worst hit with ICICI, Axis, Yes, HDFC Bank and IndusInd seeing losses up to nine percent.
In Sensex, Reliance Industries lost 6.07 percent to Rs 830.10, ITC by 5.37 percent to Rs 302.25, Infosys by 1.41 percent to Rs 3,033.85 and TCS by 2.31 percent to Rs 2,000.85.
Sectorally, the banking sector index fell the most losing 5.06 percent, followed by consumer durable index (4.61 pc), Realty index (4.39 pc) and FMCG index (3.89 pc).
European markets like the UK's FTSE, France's CAC and Germany's DAX were down while Asian indices like Nikkei, Hang Seng, KOSPI and Shanghai Composite were up. Strait Times, however, closed down.


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