Benchmark indices tumbled in trade as global markets saw heavy selling pressure with the Dow falling 2 per cent, seeing its worst fall in 18 months.
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The Sensex was trading with losses of 450 points, while the Nifty fell 130 points in trade. Worries over growth in China were dragging markets lower.
Banking stocks were badly hit in early trade with stocks like Yes Bank seeing a cut of 5 per cent, while State Bank of India and Punjab National Bank were among the big losers. Metal stocks continued their slide on worries over the Chinese growth. Stocks like Hindalco, Jindal Steel, NMDC and Vedanta all hit their 52-week lows.
Tech and pharma stocks also lost ground despite the rupee plunging to a 2-year low. IT and pharma stocks tend to benefit from a falling rupee.
Sun Pharma and Lupin Labs which have had a spectacular run in the last few trading sessions were also trading lower.
Midcap stocks were seeing even a deeper correction with stocks like Motherson Sumi down 6 per cent and Just Dial down 5 per cent.
Meanwhile, markets across Asia were trading sharply lower with most of the markets seeing cuts of 2 per cent.