The Sensex and the Nifty slumped in trade as a higher inflation data raised worries that the Reserve Bank of India may put interest rate cuts on hold in its April policy.
Leading the set of losers from the Nifty and the Sensex were stocks like Larsen and Toubro which slumped a huge 4 per cent, while Bhel saw the heaviest losses on the Nifty and slid almost 4 per cent.
Banking stocks which initially saw some buying support fell sharply with ICICI Bank, Axis Bank and Indusind Bank among the major losers on worries that there would be no further rate cuts following a slightly higher than expected inflation data.
Heavyweights, ITC and Reliance also helped push markets lower. Bharti Airtel and ONGC were the only stocks that managed to hold ground in trade.
PSU banking stocks lost heavy ground in trade with major losers being Syndicate Bank and Bank of India. Punjab National Bank, however, ended the day higher on buying support.
Meanwhile most of the Asian markets closed the day mixed, while most of Europe was trading with gains.