Chinese stock market plunged to over 8% on Monday, witnessing the biggest one-day decline in more than 8 years, as concerns grew over the economic recovery in the country.

The benchmark Chinese equity index Shanghai Composite fell 8.5% to close at 3,725.56, posting its worst one-day decline since February 2007.

An official data showed that China's industrial profits dropped 0.3% in June on year-on-year, rising worries over the health of the economy, even as the authorities roll out supportive measures.

Separately, a private data showed that the country's manufacturing declined to its lowest level in the past 15 months.

The crash in Beijing's stock markets is also led by investors' rush to book profits as uncertainty rose over the government's additional measures to support the markets.

Before Monday's steep fall, the markets rallied for the past three weeks as the government intervened in the markets to arrest the volatility.

"In the short term, sentiment is still quite negative and there are concerns about what the policymakers will do next. We don't think the stock market rout is over yet [as] there are concerns on investors' minds that policymakers will come in and do something similar again," Medha Samant, investment director of Asia equities at Fidelity Worldwide Investment, told CNBC.

Sentiment is also weighed down by uncertainty over continuation of looser monetary policy in the country.

Also, the investors remain cautious going into the US central bank's two-day meeting this week, where it is highly expected to hint at raising interest rates. Any indication of rate hike will lead to heavy outflows from emerging markets like China.

In the past one year, the Chinese equity index rose more than 150%, supported by a massive increase in retail investor participation.

However, the markets have been witnessing high volatility since mid-June, as investors thought that a bull run will start fading, having lasted for one year.

"Investors are not confident that the bull market will return any time soon," Jimmy Zuo, a trader at Guosen Securities Co in Shenzhe, told The Telegraph.

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