After moving to just a stone's throw from a new milestone, the stock markets on Monday succumbed to fears of political crisis and shed 282 points in volatile trade, extending losses to the third straight day.
Initially, the Bombay Stock Exchange (BSE) barometer Sensex hit an all-time intra-trade high of 17,982.59 on the back of strong global cues and expectations of fresh FII inflows.
The Sensex later tumbled by 660.45 points from the day's high and touched a low of 17,322.14, before closing at 17.491.39, a net fall of 281.97 points or 1.59 per cent from Friday's close of 17,773.36.
Similarly, the broad-based S&P CNX Nifty of the National Stock Exchange (NSE) dipped by 100.75 points or 1.94 per cent to close at 5,085.10 from the previous close of 5,185.85.
Investors heavily unloaded positions, reacting negatively to serious differences between the Left parties and the Congress after the UPA Chairperson Sonia Gandhi on Sunday defended the Indo-US nuclear deal.
The partial recovery from the day's low was attributed to short covering at lower levels by some operators.
Defending the deal, Gandhi had said "elements" opposed to the country's progress were enemies not only of the Congress but also of the nation's development.
Reacting strongly to this, the Left hit back, saying that India need not surrender its "vital interests" to America on the agreement and that Congress is going to an election mode.
Foreign Institutional Investors (FIIs), which have been heavy net buyers since September 19, seem to have slowed down activity during the day.