Falling exports, coupled with a slump in global crude oil prices, accelerated selling pressure in the Indian equity markets on Monday and led the benchmark indices to their lowest close in the last 20 months.
The selling frenzy led both the bellwether indices of the Indian equity markets to end the day's trade at levels last seen during May 2014. They even touched their new 52-week low during the intra-day trade.
Overall, the market breadth ended with extreme weakness -- as seven shares declined for every one share that advanced.
The barometer index receded by 267 points during the day's trade.
The selling pressure was stoked by disappointing December exports' data, which touched a 13-month low, absence of fresh triggers and bearish global cues.
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Furthermore, investors were seen cautious regarding the upcoming global macro-economic data from China, the UK and the US.
On Tuesday, the US is expected to release its consumer price index (CPI), while China comes out with its index of industrial production (IIP) and GDP (gross domestic product) data points.
Besides, long-liquidation positions and disappointing macro-data which was released earlier in the week eroded investors' hopes for an interest rate cut during the upcoming monetary policy review of the apex bank.
Initially, both the Indian bellwether indices opened on a negative note, following lower closing of the US markets on Friday when they crashed by more than two percent.
However, both indices soon pared their initial losses on the back of positive European markets, expectations of healthy Q3 results and short-covering.
In addition, prices were supported by Prime Minister Narendra Modi's Start-Up India Action Plan which was released on Saturday.
The barometer 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange (BSE) closed lower by 267 points or 1.09 percent -- its lowest closing since May 16, 2014.
Similarly, the wider 50-scrip Nifty of the National Stock Exchange (NSE) ended the day's trade deep in the red. It was down by 86.80 points or 1.17 percent at 7,351 points -- its lowest closing since May 30, 2014.
The NSE Nifty breached the psychological level of 7,400 points during the day's trade. It also touched a new 52-week low at 7,336.40 points.
The S&P BSE Sensex, which opened at 24,400.78 points, closed at 24,188.37 points -- down 266.67 points or 1.09 percent from the previous day's close at 24,455.04 points.
During the intra-day trade, the Sensex touched a high of 24,524.85 points and a low of 24,141.99 points -- its new low in 52 weeks.
The S&P BSE market breadth favoured the bears -- with 2,424 declines and only 305 advances.
"Bearish cues -- such as the plunge in exports, lower closing of US markets on Friday, and continuous weakness in oil prices and absence of any fresh triggers pulled down markets," Anand James, co-head, technical research desk with Geojit BNP Paribas Financial Services, told IANS.
"After a lower opening, the markets recovered on the back of positive European markets and short-covering."
Vaibhav Agarwal, vice president and research head at Angel Broking, elaborated that European markets which traded in the green failed to lift markets.
"We expect earnings to drive markets going forward with index heavyweights such as Reliance Industries, Axis Bank and ITC set to declare results this week," Agarwal noted.
"Investors will also watch out for Chinese GDP and industrial production figures due tomorrow."
Nitasha Shankar, vice president for research with YES Securities, cited that headline index Nifty closed below the psychological level of 7,400 portending to further correction in the coming trading session.
"Broader markets witnessed back to back massive plunge with midcap and smallcap losing in the range of 3-4 percent respectively," Shankar said.
"Banking index reversed in late trade after a minor pull back confirming the bearishness dominant in banking shares."
Sector-wise, shares of healthcare, capital goods, automobile, banking and consumer durables came under selling pressure.
The S&P BSE healthcare index plunged by 305.93 points, capital goods index receded by 256.13 points, automobile index declined by 246.43 points, banking index slumped by 199.81 points and consumer durables index edged-lower by 120.27 points.
The foreign institutional investors (FIIs) were net sellers during the day's trade, while domestic institutional investors (DIIs) were net buyers.
According to data with stock exchanges, FIIs divested Rs.1,203.84 crore, while DIIs bought stocks worth Rs.1,122.80 crore.
Apart from equities, the rupee got battered in the day's trade. It touched a new 28-month low. It ended weaker by nine paise at 67.68-69 to a US dollar from its previous close of 67.60 to a greenback.
Major Sensex gainers during Monday's trade were BHEL, up 4.29 percent at Rs.142.35; Tata Steel, up 2.76 percent at Rs.236.25; Tata Consultancy Services (TCS), up 0.84 percent at Rs.2,282.45 and Wipro, up 0.72 percent at Rs.547.35.
Major Sensex losers during day's trade were Reliance Industries, down 5.14 percent at Rs.1,018; Bajaj Auto, down 3.29 percent at Rs.850.60; Asian Paints, down 3.29 percent at Rs.850.60; Cipla, down 2.72 percent at Rs.590.85; and ONGC, down 2.12 percent at Rs.214.90.