Nifty met with the same fate, down 161 points. There was heavy selling all around as investors went around booking profits following a SIT report that Sebi should do more to identify end beneficial owners of P-Notes (PNs) and restrict their transfer. Market players felt the move would hit investments.
PNs are a popular offshore derivative instrument used by overseas investors to invest in Indian stocks.
Other Asian markets did no better, which ended in the red due to worries that China is headed for a sharp slowdown despite the government's efforts to revive it. The Shanghai Composite plunged as much as over 8 percent.
Further weakness in the rupee against the dollar made things worse.
Starting lower, the 30-share gauge broke below the crucial 28,000-level before ending at 27,561.38, down 550.93 points, or 1.96 percent, its biggest single-day fall since June 2.
The NSE Nifty slipped below the 8,400-mark to settle at 8,361, down 160.55 points, or 1.88 percent. Intra-day, it shuttled between 8,351.55 and 8,492.20.
Tata Steel lost most (5.17 percent), followed by Hero MotoCorp. Of the 30-share Sensex pack, 29 ended lower. Only Bajaj Auto gained.
Sectorally, shares of metal, capital goods, banking, power, realty, auto, oil and gas and IT all suffered losses.
Broader markets mid-cap and small-cap indices didn't escape the selling pressure, which closed lower 1.38 percent and 1.07 percent, respectively.
Globally, Hong Kong's Hang Seng closed 3.09 percent lower while Japan's Nikkei slumped 0.95 percent. European markets slid for the fifth day.

Latest News  from Business News Desk