Mumbai: The stock market on Friday plunged over 700 points as the BSE Sensex fell below the 17K-mark on across the board selling by investors amid fears of recession in the US and debt crisis in some euro-zone nations.

Recovering partially, the Bombay Stock Exchange 30-share barometer, which fell for the fourth straight day to touch 14-month low, closed at 17,305.87 - down 387.31 points or 2.19 per cent - eroding investor wealth by Rs 1.33 lakh crore.

All the 13 sectoral indices recorded major losses with stocks of IT, metals, realty, financials, oil and gas and capital goods leading the fall.

Sensex blue chips RIL, Infosys, ICICI Bank, ITC and Sterlite lost 3-7 per cent.

Finance Minister Pranab Mukherjee sought to calm market nerves saying, "This is nothing domestic. It is substantially due to external factors. Stock markets fell due to global
factors like weak recovery in US and spread of debt burden in Eurozone. Current volatility is temporary."

Market regulator Sebi said it was watching the situation closely. "... And our belief is that everything is perfect and right in our market. There is nothing for the people to worry," said Sebi Chairman U K Sinha.

"Our risk management system is working perfectly. All the settlements are taking place," he added.

The Reserve Bank said, however, that India will have to learn to live with volatility in the global economy.

"Markets go up and down because of various factors. We don't go into this. Situation is becoming more complex and volatile by the day. So you have to live with that," said RBI
Deputy Governor K C Chakrabarty.

Intra-day, Sensex lost 702 points to slip below 17,000 level at 16,990.91 points, last seen on June 10 last year. The broader NSE 50-issue Nifty plunged 120.55 points or 2.26 per cent to close at 5,211.25 -- the level not seen since June 14, 2010, when it had closed at 5,197.70.

Investors have been selling stocks since RBI hiked its key interest rates last week for the 11th time since March, 2010 to tame stubbornly high inflation.

Worries over global economies going into the slow mode added to investor woes the world over.

Asian stocks tumbled after a meltdown on Wall Street, triggered by concerns that the US economy might slip into recession. Key indices in China, Hong Kong, Japan, Singapore, South Korea and Taiwan ended down by 2.15 per cent to 5.58 per cent. European markets too were down in afternoon deals.

In the US, Dow Jones and Nasdaq slumped 4.31 per cent and 5.08 per cent yesterday, biggest falls in over two years.

"With weakness in the global economy, there are concerns about an impact on our exports. The overall GDP growth could also moderate in case exports are hit badly," said Dipen Shah
Vice President, Kotak Securities.

He said the global developments are partially positive for India on inflation side and if relevant actions on growth are taken up, they can make India a preferred destination.

Overall, 27 of the 30 index-based counters ended in the red, while others closed with small gains. All 13 sectoral indices closed between 3.93 per cent and 1.15 per cent.

The total market breadth at BSE was sharply negative as 2,364 shares closed with losses, while only 557 finished with gains.

Markets crashed due to external reasons: FM

Meanwhile speaking to reporters, Finance Minister Pranab Mukherjee said the plunge in the stock markets is purely due to external factors, like concerns over the US recovery and Euro Zone debt crisis, and hoped the volatility is temporary and it would recover soon.

"This is nothing domestic. It is substantially due to external factors," Mukherjee said.

"This is mainly because of the fact that some projection has been made about poor recovery of US. This has affected the market sentiment. Current volatility is temporary. Hope that there will be a recovery shortly", he said, while citing two-main reason for fall in stocks world over.

"Asian stocks are tumbling today in the light of sharp sell off in the world markets due to poor economic indicators in the US and fears of sovereign debt default contagion in Euro Zone spreading to other European countries," he said.

"Therefore, it has its downfall in the Indian market," he added.

JPN/Agencies