Besides, the rupee depreciated against the dollar to over three-week low of 62.20 (intra-day) on sustained capital outflows which dampened market sentiments.
The BSE Sensex, after opening lower at 28,566.50, continued to slide on selling pressure in bluechip companies, forcing the Sensex to touch a low of 28,183.32 before settling lower by 490.52, or 1.71 percent, to close at 28,227.39.
This is its weakest closing since January 16.
As many as 24 stocks closed with losses, including L&T, GAIL, Cipla, SBI, M&M, Bharti Airtel, Tata Motors, Maruti Suzuki, ICICI Bank, TCS, Axis Bank, Hero MotoCorp, RIL, BHEL, HDFC Bank, ITC Ltd, Coal India, NTPC and HDFC Ltd.
However, Dr Reddy, Bajaj Auto, Sun Pharma, ONGC, Wipro and Infosys were among the Sensex gainers.
The 50-share NSE Nifty dipped below the psychological 8,600-mark by tumbling 134.70 points, or 1.56 percent, to close at 8,526.35.
Foreign funds continued to remain net sellers on domestic bourses which weighed on the sentiment and added to selling, equity brokers said.
Disappointing corporate earnings and caution ahead of GDP data for December quarter also cast shadow on the trading sentiments, they said.
Meanwhile, FPIs sold shares worth Rs 96.45 crore on last Friday, as per the provisional data.
Among others, Tata Power fell by 2.44 percent and Reliance Power closed 5.59 percent lower on fresh round of selling pressure on fears that the new government in Delhi may again lower power tariffs.

Mixed trend at other Asian markets and a weak opening at European markets also weighed on sentiments here.

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