Amid heavy sell-off, the total market capitalisation of BSE listed companies crashed below the Rs 100 lakh crore-mark, wiping out nearly Rs 1.54 lakh crore from investor wealth.

Further accelerated selling activity here was a result of domestic manufacturing sector output shrinking to a 28-month low in December and fresh weakness in the rupee.

Other Asian stocks, which opened after a long break, were on the receiving end after a private survey showed Chinese factory data contracted for a fifth straight month. Consequently, Shanghai index plunged by more than 7 percent and trading was halted for the rest of the day.

"The slump in Chinese is expanding, which is impacting all the emerging markets. It is not a good start for the Indian market, which was hoping in expectation that FIIs will return post the holiday season," said Vinod Nair Head-Fundamental Research at Geojit BNP Paribas Financial.

Besides, a flare up in the Middle East after Saudi Arabia cut diplomatic ties with Iran following a row over Tehran's execution of a Shiite cleric also had its negative impact.

Global crude prices surged by 1.64 percent to USD 37.89 per barrel while in the local market, rupee weakened by 45 paise to 66.59 (intra-day) against the dollar.

From the onset, the BSE 30-share Sensex remained in the negative zone and its settled 537.55 points or 2.05 percent down at 25,623.35, its weakest closing since September 22. The index had gained about 201 points in the last two sessions.

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