The Sensex slipped to its 15-month low at 13,461.6 points, down 340.62 points or 2.47 per cent, its lowest since April 13, 2007. The S&P CNX Nifty index on the National Stock Exchange (NSE) closed at 4040.55 points, down 96.1 points or 2.3 per cent.
Key benchmark indices in Singapore, China, Japan and Taiwan were down by 0.33-1 per cent, while indices in Hong Kong and South Korea were up by 0.01-0.27 per cent.
Political uncertainty weighed heavy as speculations were rife whether the ruling Congress-led United Progressive Alliance government will be able to push through a much-debated Indo-US nuclear deal and still retain power in the face of heavy opposition from its key communist allies.
On Sunday, the Left parties renewed their threat to withdraw support if Prime Minister Manmohan Singh went ahead with the nuclear deal.
Despite a significant fall witnessed so far, market participants see no respite going forward since sentiment has been battered badly.
"The broader market may see a small rally on account of short covering, but we do not see the markets reviving any time soon. We continue to feel that there is a further downside to the interest rate sensitive pack that includes real estate, banking and auto," said Amar Ambani, vice-president (research) at India Infoline.
Brokers further pointed out that going forward, crude oil prices will be a decisive factor for any market movement. Meanwhile, crude oil prices rose to a record above $143 a barrel on speculation that the dispute over Iran's nuclear programme may disrupt supply from the Opec's second-largest producer.
The top gainers in the market include Hindalco (up 1.97 per cent to Rs 142.1 per share), ITC (up 1.66 per cent to Rs 187) and Infosys Technologies (up 1.59 per cent to Rs 1,734.75).
