Benchmark indices were hit badly in trade as a sudden fall in the European markets triggered a sell off with several blue chip names falling sharply.
The fall was triggered by a sudden drop in the European markets after Volkswagen's emission scandal.
The Sensex ended the day with losses of 541 points, while the Nifty fell 165 in trade. Almost all of the Nifty stocks ended the day in the red, except Infosys which managed to show some resilience in a falling market.
The stock ended the day flat and limited falls in the Sensex after the company won a GST contract from the government.
Banking stocks were the ones that were badly affected in the fall with Axis Bank shedding a huge 2 per cent, while Bank of India and Canara Bank lost 3 per cent each. Yes Bank also slumped a huge 3 per cent in trade.
Amtek Auto fell 10 per cent after reports that the company had defaulted on its bond payment, which could affect the banking sector as well.
Mid cap shares also fell in line with the broad markets with stocks like Apollo Tyres, GMR and IDBI Bank falling 4 per cent each.
Shares in MMTC ended the day higher after the board approved a proposal for sale of 10 percent ICEX equity to two bidders.
Meanwhile, Asian markets managed to close higher led by gains in the Shanghai Composite, which ended the day 1 per cent higher. The Japanese markets were closed today for a pubic holiday.