Intense selling pressure was seen in the markets, after the rupee tumbled against the dollar, following the RBI's decision to keep interest rates on hold. The Sensex dived 792 points to close the day at 34,376 points, while the Nifty ended lower by a whopping 286 points.

At one stage in trade, the Sensex was down almost 900 points, while the Nifty was down as much as 325 points.

It was a very volatile session, in which the markets initially cheered the RBI's decision to hold interest rates steady. However, as soon as that decision was taken markets recovered, but, the rupee plummeted in trade to scale past the 74 levels with some ease. As the rupee hit a historic low, it was carnage as investors dumped stocks.

The rupee was last trading at 74.20 to the dollar, a staggering 67 paise drop over Thursday's close. Analysts believe that unless there are some measures that are announced by the government to curb the falling rupee, the currency could plunge even further.

The RBI also changed its stance to 'calibrated tightening', which was some concern for the markets.

Terrible day for NBFCs

Housing Finance companies had a terrible day, following reports that the RBI may tighten norms for raising money through commercial papers. Dewan Housing shares collapsed almost 9 per cent, while L&T Finance Holdings was down a whopping 7 per cent.

With today's fall the Nifty has shed nearly 7 per cent this week, marking the worst week this year. Analysts are of the opinion that there maybe more downside in the next week as well, if there are no immediate measures announced to tame the rupee.

Cues from across the globe were also bad as bond yields in the US keep surging. The European DAX, French CAC and the UK's FTSE were all lower in trade.