The key domestic benchmark indices plunged during the late noon trading session amid weak cues from the European peers, coupled with caution ahead of the expiry of September derivative contracts on Thursday.
At 14:22 hours, the 30-share barometer, Sensex was trading at 25715.66, down by 477.32 points or by 1.82 per cent, while the NSE Nifty was at 7850.35 down by 126.75 points or by 1.59 per cent.
European counters made a weak start with CAC and FTSE trading in red despite a US bounceback as investors tread cautiously in the wake of the Volkswagen emissions scandal and last week's decision by the US Federal Reserve to hold interest rates.
Volkswagen shares plunged 4.3 per cent on the continuing controversy over its emission tests. The company's stock fell more than 20 per cent on Monday after the German carmaker admitted it had rigged emissions tests of diesel-powered vehicles in the United States, and U.S. authorities said they would widen the probe to other automakers.
Further, the Indian rupee too trimmed some of its early gains and was trading at 65.66 to the US dollar up by 7 paise following sustained bouts of dollar selling by exporters and banks amid strength in the local equities.
Amid the range-bound trade, Sensex touched an intraday high of 26339.1 and an intraday low of 25708.19, while the NSE Nifty touched an intraday high of 8021.6 and an intraday low of 7820.9.
Major laggards on the D-street included, Vedanta Ltd. (Rs. 93.05,-5.58%), Hindalco Industries Ltd. (Rs. 73.80,-5.38%), NTPC Ltd. (Rs. 120.50,-4.82%), Coal India Ltd. (Rs. 329.70,-3.70%), Tata Motors Ltd. (Rs. 319.80,-3.56%), among others.
However, some buying was witnessed in stocks including Mahindra & Mahindra Ltd. (Rs. 1193.50,+0.77%), Infosys Ltd. (Rs. 1109.90,+0.48%), Wipro Ltd. (Rs. 594.85,+0.43%), among others.
Among the sectors, Metal and Power indices witnessed major sell-off , trading down by 3.17 per cent and 3.09 per cent respectively.
The Market breadth, indicating the overall strength of the market, was weak. On BSE out of total 2632 shares traded, 935 shares advanced, 1586 shares declined and 111 remained unchanged.