Fears over a slowdown in global economic growth, coupled with sustained selling by foreign funds and a weak rupee, pulled the benchmark Sensex down by 378 points on Thursday.
Analyts said that fears of a global slowdown strengthened after Apple, one of the world's largest companies by market value, sharply cut its financial forecasts partly blaming US trade tensions with the China along with a slowdown in the Chinese economy.
Additionally, weak factory output data from China and India released on Wednesday continued to dent investors sentiments.
"European and Asian markets traded under pressure while trading in the US index futures indicated that the Dow Jones Industrial Average could slide 306 points at the opening bell today, 3 January 2019," said Abhijeet Dey, Senior Fund Manager-Equities, BNP Paribas Mutual Fund.
Consequently, the S&P BSE Sensex settled 377.81 points or 1.05 per cent lower at 35,513.71 points after touching an intra-day high of 35,999.66 and a low of 35,475.57.
The NSE Nifty50 closed at 120.25 points or 1.11 per cent down at 10,672.25 points.
"The market continued to trade on a negative bias on account of added worries over a slowing world economy and rising domestic fiscal deficit," Geojit Financial Services Head of Research Vinod Nair said.
"A volatile equity market extended loss in Asia and in oil prices. Going ahead, the investors are likely to shift their focus to the corporate earnings beginning next week."
Further, the US dollar rose as weak economic data from some major economies caused concerns over global growth, sparking demands for safe havens.
The Indian currency weakened by 2 paise on Thursday to end at 70.19 per dollar, against the previous close of 70.17 per dollar. The currency was one of the worst performers in Asia during 2018, losing over 9 per cent.
Counters like energy, oil and gas and capital goods came under heavy selling pressure while realty stocks -- considered defensive investment as they are known to produce stable yields despite uncertainity -- reversed early gains.
Lately, realty stocks have outperformed the benchmark indices for the past few sessions on the expectation that the GST Council at its January 10 meeting will bring down the tax rate on under-construction housing to 5 from 12 per cent.
Other indices like FMCG and telecom were the only gainers on the BSE.
"Technically, with the Nifty correcting sharply after the recent rise, the near term view on the index remains weak," said Deepak Jasani, Head - HDFC Securities Retail Research.
"Near term supports to watch are at 10,634-10,594. Upside resistances are at 10,738."
According to the provisional figures from the stock exchanges, FIIs sold shares worth Rs 972.81 crore, while DIIs bought Rs 34.52 crore stocks.
Stocks-wise, only five among the 30 scrips on Sensex inched up led by Bajaj Auto with a 0.41 per cent gain, followed by Asian Paints, HCL Technology, Hindustan Uniliver and Bharti Airtel.
In sharp contrast, Mahindra and Mahindra lost 3.04 per cent, followed by ONGC, Vedanta Tata Steel and Larsen and Tubro declining in the range of 2 to 3 per cent.
--IANS
ravi-rv/vm
Disclaimer: No Business Standard Journalist was involved in creation of this content
