The BSE Sensex dipped 274 points at 17,362.87 on profit-booking ahead of the results of crucial state elections, amid weak global markets as China projected lower growth for this year.
Realty, metals, banking, capital goods, PSU, consumer durables and refinery stocks faced the selling pressure.
Global markets turned weak as China, the world's second largest economy, for the first time in seven years scaled down its GDP growth target to 7.5%.
"Coupled with the jittery sentiments on slowing China’s growth, the sentiment in the domestic market was cautious ahead of important state election results to be declared tomorrow. Weak openings in European markets worsened the sentiments during the afternoon trade." said Shanu Goel, Research Analyst at Bonanza Portfolio.
The BSE 30-scrip benchmark Sensex opened lower at 17,598.42 and dropped further to 17,312.30. Eventually, it settled at 17,362.87, down 274.12 points, or 1.55%.
The NSE 50-share Nifty also dropped by 79.05 points or 1.47% to end at 5,280.35.
Top heavyweights on the Sensex, Reliance Industries fell by 1.97% and Infosys by 1.90%.
SBI, ICICI Bank, HDFC Bank, L&T, BHEL, Jindal Steel were among other big losers.
In Asia, indices in China, Hong Kong, Japan, Singapore, South Korea and Taiwan fell by up to 1.38%.
Mining shares led decline in European stock markets. Key indices in France (CAC), Germany (DAX) and the UK (FTSE) shed up to 1.14%.