Following a steep decline in the Asian and other global markets, Sensex tanked 355 points on Monday over concerns of a global slowdown.
Except for oil and gas and power sector stocks all the sectors on both BSE and NSE ended in the red led by finance and banking stocks.
"Lingering concern on global economic slowdown dragged down the domestic indices. US bond yield has fallen as risk appetite of investors to equities reduced due to fear of US recession," said Vinod Nair, Head of Research, Geojit Financial Services.
The BSE Sensex declined 355.70 points or 0.93 per cent to 37,808.91, while Nifty shed 102.65 points or 0.90 per cent.
Following the decline in the US equity markets last week, all eastern markets also slipped 1-2 per cent on Monday. European markets too were in the red, said Joseph Thomas of Emkay Wealth Management.
"The lower manufacturing PMI in Germany, and contraction in Germany and France, and recession already having set in Italy, markets may progressively test lower levels."
The top gainers were ONGC which surged close to 4 per cent followed by Coal India, Power Grid, NTPC and Bajaj Finance up in the 1 to 2 per cent range.
Among the losers were Vedanta, Tata Motors, Yes Bank, and Mahindra and Mahindra which declined up to 4 per cent.