Benchmark indices crashed in trade, led by a sell-off in the Asian and European markets.
Political tensions over the killing of a journalist in Turkey took its toll, while Budget concerns in Italy, saw benchmark indices in European countries falling.
The Sensex ended the day with losses of 287 points, closing below the 34,000 points mark. The Nifty too fell below the 10,200 points mark to close at 10,148 points.
Analysts now fear that the Nifty may even fall below the 10,000 points mark this week.
The selling was broadbased with 47 of the 50 Nifty stocks seeing a decline. The biggest loser from the Nifty was Asian Paints, which fell a huge 6 per cent, after its results failed to cheer the streets.
The other losers that contributed to the decline were stocks from the pharma and the IT sector. Wipro, Sun Pharma, Dr Reddy's and Lupin led the declines.
Bajaj Finance, which reported a good set of quarterly numbers fell, despite net profit surging to Rs 920 crores.
Shares in RBL Bank too fell, despite the bank reporting a good set of numbers. The stock ended lower by 2.5 per cent.
Meanwhile, global cues were extremely weak with the German DAX, French CAC and the UK's FTSE declining by more than 2 per cent in trade.