The benchmark index on Bombay Stock Exchange recovered partly after shedding over 350 points before mid-session but still lost over 100 points to end the day below the crucial 16k level amid uncertainty over hiking the fuel prices.
The 30-share BSE bellwether Sensex settled the day at 15,962.56, a loss of 100.62 points, or 0.63 per cent, from its previous close.
Similarly, the 50-share S&P CNX Nifty of the National Stock Exchange dipped by another 23.70 points, or 0.50 per cent to close at 4,715.90 from its last close.
This is the first time after April 11 that the Sensex closed below 16K level.
The market had plunged by 354 points to the day's low of 15,709.51 before mid-session on panic selling triggered by weak global cues as well as fears of political uncertainty.
The bourses however staged a recovery later as buying emerged after news that the Cabinet will meet tomorrow to decide on raising fuel prices.
Marketmen said withdrawal of tax refunds on cement exports only a day after restoring it also impacted the trading sentiments.
Asian indices closed down by 1.07 per cent to 1.83 per cent. Only Shanghai Composite was down less than one per cent.
Refinery stocks bucked the trend and helped market to bounce from its lows. Heavyweight and India's largest private sector company Reliance Industries surged by 2.17 per cent and ONGC by 1.10 per cent.
Realty major DLF gained 2.61 per cent, ACC 3.74 per cent, Wipro 2.57 per cent, Tata Motor 1.31 per cent and Ranbaxy 3.09 per cent.