The Bombay Stock Exchange benchmark Sensex lost 722 points to dip below the 13,000 level in mid-session trading on Thursday, on aggressive selling by major market players.
The 30-share index, which had recovered over 703 points in previous day's trading, plunged by 722.28 points to 12,942.34 at 1330 hrs with heavy-weight stocks led by metal and realty segment fell sharply.
Similarly, the National Stock Exchange index's Nifty dropped by 215.60 points to 3,877.75 as almost all 50 participant stocks in it were in red.
Marketmen said steel shares remained under pressure ahead of the government's meeting with steel producers on Thursday to review restrictions on exports and discuss an increase in retail prices of the metal.
They said a weakening global trend further fuelled the falling trend.