The benchmark index ended the day lower by a huge 807 points at 22951.83, while the Nifty dropped 239.35 points in trade.
The Nifty dropped below the 7000 points for the first time since May 2014.
Here are main reasons why market crashed
1) US Fed Chair Person Janet Yellen comments on weakness in the global economy and risks from China only added fuel to the fire.
2) Poor results from some banking majors in Europe, particularly Societe Generale, which fell as much as 10 per cent aggravated selling in stocks in Europe, adding to pressure in Indian markets.
3) State Bank of India, which reported quarterly numbers that were below estimates, dropped sharply by 3 per cent.
4) As per experts, foreign investors continued to pull cash from emerging markets like India.
5) Midcap stocks shed nearly 6 per cent in trade. Jubilant Foodworks, Tata Global, Oriental Bank and Unitech were all down more than 10 per cent each.
Rupee breached the 68-mark as it fell by 18 paise against the dollar due to demand from banks and importers gathered pace amid bearish local equities.