A benchmark index of Indian equities markets, the 30-scrip Sensitive Index (Sensex), plunged 535 points or 1.82 percent in Monday's late afternoon trade session as banking, capital goods and information technology (IT) stocks plummeted.
The wider 50-scrip Nifty of the National Stock Exchange (NSE) was also trading with heavy losses. It was down 157.10 points or 1.76 percent at 8,780.65 points.
The Sensex of the S&P Bombay Stock Exchange (BSE), which opened at 29,316.54 points, was trading at 28,913.95 points (at 2.00 p.m.), down 535 points or 1.82 percent from the previous day's close at 29,448.95 points.
The Sensex has touched a high of 29,321.06 points and a low of 28,843.48 points in trade so far.
All sector-based indices of the BSE were trading in red except for healthcare.
Banking, capital goods, IT, technology, entertainment and media (TECK) and consumer durables stocks came under heavy selling pressure.
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The BSE S&P Bank index was down 570.22 points, followed by capital goods index which was lower by 410.09 points, IT index plunged 280.55 points, automobile index declined by 141.53 points and metal index fell 140.32 points.
However, the BSE S&P healthcare index was up 41.91 points.
According to market analyst, the Indian markets have reacted negatively to the sharp increase in the US non-farm payroll data for January.
The US non-farm payrolls rose by 295,000 jobs last month. The unemployment rate fell to 5.5 percent from 5.7 percent in January 2014.
The Indian markets were anxious as rapid increases in non-farm payroll data might lead to an increase in inflation.
This can make the US Federal Reserve to raise interest rates sooner than previously expected. With higher interest rates, foreign institutional investors will be led away from emerging markets such as India.
"In the coming week the Indian market will be cautious as the US non-farm payroll data has gone up rapidly. This might lead to a sooner than expected interest rate rise in the US," Devendra Nevgi, chief executive, ZyFin Advisors, told IANS.