A benchmark index of Indian equities markets Friday fell 348.40 points or 1.37 percent on heavy selling in capital goods and metal stocks.
Banking, oil and gas, realty, power, consumer durables and auto sectors also came under selling pressure while good buying was observed in IT and healthcare scrips.
Traders said the market corrected after the government said that the General Anti-Avoidance Rules (GAAR) will be applicable from April 1, 2015. The market was hoping that GAAR would be deferred to 2017.
Sentiment was affected because of the faltering growth in Europe and an emerging banking crisis in Portugal, where its second largest bank, Banco Espirito Santo, was suspended.
The 30-scrip Sensitive Index (Sensex) of the S&P Bombay Stock Exchange (BSE), which opened at 25,488.86 points, closed at 25,024.35 points, down 348.40 points or 1.37 percent from the previous day's close at 25,372.75 points.
The Sensex touched a high of 25,548.33 points and a low of 24,978.33 points in the trade so far.
The Sensex had gained over 114.10 points or 0.45 percent in the early session.
The benchmark index went down 3.6 percent for the week, its biggest weekly fall since December 2011.
The capital goods index plunged 745.97 points, metal index tanked 477.07 points, bankex went down by 455.55 points, oil and gas index slid by 302.85 points, realty index slipped by 103.69 points, power index was down by 101.40 points, consumer durables index decreased by 102.90 points and auto went down by 158.22 points.
The S&P BSE IT index gained by 131.01 points and healthcare index moved up by 126.90 points.
The wider 50-scrip Nifty of the National Stock Exchange closed 108.15 points or 1.43 percent down at 7,459.60.
The major Sensex gainers were: Sun Pharma, up 2.28 percent at Rs.741.45; Tata Consultancy Services, up 2.13 percent at Rs.2,398; Dr.Reddy's Lab, up 2 percent at Rs.2,704.95; and Hindustan Unilever, up 1.42 percent at Rs.640.90.
The losers were: BHEL, down 8.10 percent at Rs.223.40; Hindalco Industries, down 5.59 percent at Rs.166.45; State Bank of India, down 4.96 percent at Rs.2,421.55; L&T, down 4.89 percent at Rs.1,574.45; Tata Steel, down 4.01 percent at Rs.500.95; Tata Power, down 3.60 percent at Rs.101.85; and Reliance Industries Ltd, down 3.13 percent at Rs.967.
Among the Asian markets, Japan's Nikkei closed 0.34 percent down and Hong Kong's Heng Seng ended 0.02 percent lower, while China's Shanghai Composite Index went 0.42 percent up.
In Europe, London's FTSE 100 went up by 0.25 percent, the French CAC 40 was up by 0.56 percent and Germany's DAX Index was up 0.13 percent at the closing bell here.
