The benchmark BSE Sensex plunged over 313 points Monday to settle at 27,643.88 and the Nifty dived below the crucial 8,400 mark due to widespread profit-booking after recent gains amid lower-than-expected earnings numbers from ITC.
Renewed fears about an earlier-than-expected US rate hike weighed on sentiment too, brokers said.
The 30-share BSE index resumed on a shaky wicket and continued to decline to hit a low of 27,614.32 as selling intensified before settling at 27,643.88, down 313.62 points, or 1.12%.
The gauge had gained 148.15 points in the previous session on Friday.
Of the 30-share Sensex pack, 26 ended lower while ONGC, Bharti Airtel, Wipro and M&M advanced.
The 50-issue Nifty slipped below 8,400 level by falling 88.70 points, or 1.05%, to close at 8,370.25. Intra-day, it shuttled between 8,364.15 and 8,441.95.
Investors who had been accumulating stocks in the past few sessions with hopes of a rate cut by the Reserve Bank of India were seen trimming positions after earnings from some blue-chips failed to meet expectations of the Street.
Shares of diversified group ITC fell 3.29% after its March quarter earnings did not cheer investors.
ITC on Friday reported a modest 3.65% rise in standalone net profit at Rs 2,361.18 crore for the fourth quarter that ended March 2015.
Vedanta lost most among Sensex and Nifty stocks, which tumbled 3.59% to Rs. 200, as Goldman Sachs said in its report that copper demand will fall in coming 12 months on weak commodity demand growth in China, lower oil prices and a a stronger dollar.
Other major losers were HDFC, Tata Steel, GAIL, Cipla, Tata Motors, SBI, Coal India, Dr Reddy's Lab, Hindalco, Axis Bank, L&T, Hind Unilever, Tata Power, Infosys, RIL, NTPC, TCS, Hero MotoCorp, ICICI Bank, Bajaj Auto and BHEL.
The broader markets too saw profit-booking by investors. The BSE smallcap index ended the day with a fall of 0.22% while the midcap index was down 0.08%.
A weak trend at European markets in the morning session and a hardening dollar after the US Federal Reserve indicated that the central bank is on track to raise interest rates this year dampened sentiment.
Sector-wise, BSE metal index suffered the most by falling 1.70%, followed by FMCG (1.62%), capital goods (0.87%), IT (0.74%), banking (0.69%), healthcare (0.60&), realty (0.45%), auto (0.28%) and power (0.16%).
Last Friday, foreign portfolio investors and domestic institutional investors (DIIs) net bought shares worth Rs. 211.42 crore and Rs. 237.62 crore, respectively, according to provisional stock exchange data.