Shares of companies with exposure to the UK went into a tailspin, plummeting up to 8 per cent, as Britain's decision to leave the European Union dealt a big blow to investor sentiment.
Tata Motors plunged 7.99 per cent to Rs 449, Tata Steel dropped 6.37 per cent to Rs 312.50 and TCS fell 2.78 per cent to Rs 2,570.70 on BSE.
Tata Motors and Tata Steel were the worst hit among the 30-Sensex blue-chips during the day. The former had plunged nearly 13 per cent during the day.
According to estimates, there could be a significant impact on Tata Motors-owned Jaguar Land Rover following Brexit vote.
Similarly, Motherson Sumi was badly hit, which tumbled 8.48 per cent.
"Though Indian economy is unlikely to have a major direct impact, it will certainly influence liquidity to the EMs like India during such global chaos. This will slow down FII inflows and depreciate the rupee. It will also impact stocks which have high degree of business exposure in the UK and European regions," said Vinod Nair, Head of Research, Geojit BNP Paribas Financial Services.
Shares of Hindalco tumbled 5.17 per cent, Dr Reddy's Lab 0.64 per cent and Bharat Forge 0.35 per cent.
From the IT pack, Tech Mahindra lost 4.74 per cent, Wipro 1.52 per cent and Infosys 1.41 per cent.
According to reports, Indian IT companies earn anywhere between 6-18 per cent of their revenues from the UK, which has traditionally been the gateway for them to Europe.
"From India's perspective, Brexit will have both positive and negative impact. Brexit... Will exert downward pressure on global commodity prices and India will benefit being a net commodity importer. With risk rising in the financial market, foreign capital will flow out putting pressure on the rupee to depreciate and making Indian financial market volatile.
"A number of Indian corporates having exposure to Europe/UK either through trade or in case their production units are located there would be adversely impacted," said Sunil Kumar Sinha, Principal Economist, India Ratings and Research.
"While a fall in the Indian markets was warranted and they may continue to face these headwinds, we expect them to perform better than most other emerging markets and also developed markets," said Dipen Shah, Senior Vice-President and Head Private Client Group Research.
Meanwhile, the Sensex showed an extremely weak trend and tumbled 604.51 points to settle at 26,397.71.
