Tracking weak global cues, the benchmark Sensex on Monday plunged by 574.39 points during morning trade on fresh selling spree triggered by fears of the US economic slowdown in the near future.
Federal Reserve Chairman Ben Bernanke had last weekend warned about a slowdown in the US economy and a likely rate cut in the next meeting.
The Bombay Stock Exchange 30-share Sensex opened sharply lower at 18,640.52 and later dipped to a low of 18,333.21, down by 574.39 points from Friday's close of 18,426.14.
The Sensex later recovered moderately and was quoted at 18,414.70 at 1030 hours.
Investors' cautious approach was also attributed to strong possibility of the debt-rating services downgrading hundreds of mortgage-related investments, creating the potential for more market unrest.
Similarly, the broad-based S&P CNX Nifty of the National Stock Exchange (NSE) tumbled by 185.75 points to 5,477.50 before being quoted at 5,500.40 at 1030 hours from previous close of 5,663.25.