The NSE-flagship Nifty plummeted sharply by over 73 points to close below the psychologically significant 7,800 barrier in a late broad sell-off amid shaky global sentiment.
Gloomy economic data out of China after its industrial profits data slumped to sharpest pace since 2011, rekindled fears over fresh evidence of stalling economy, dampening overall trading sentiment.
Moreover, the Fed Chair Janet Yellen re-emphasising the intention to raise rates later this year further aggravate volatile situation.
Bourses made a positive start to the first trading day of the October series in the derivatives segment after losing over 1.4 percent last week as traders turned buyers especially in rate sensitive counters a day before the RBI meet. But soon gave back all its gains and traded lackluster for most part of the session.
The range-bound market turned highly volatile in late afternoon trade after investors turned highly cautious and booked profits ahead of policy announcement.
With the country's improving macros fundamentals at the time of global slowdown, it is highly expected that apex bank will cut interest rates for the fourth time this year in its bi-monthly policy review tomorrow in order boost economy, a floor trader said.
Elsewhere, Japanese markets suffered a severe jolt with the key indices tumbling over 1.32 per cent ahead of key macro data, while China's benchmark Shanghai Composite ended marginally higher. The markets in South Korea, Hong Kong and Taiwan were closed for public holidays.
European equities are trading sharply lower tracking uninspiring cues from Asian counterparts.
The 50-share index opened higher at 7,892.80 and swung between 7,893.95 and 7,787.95 before ending at 7,795.70, showing a steep loss of 72.80 points, or 0.93 per cent.
Metal topped among sectoral indices, falling 2.50 per cent, followed by Media (2.36 pc), Auto (1.77 pc), Technology (0.95 pc), Infra (0.85 pc), Bank Nifty (0.56 pc), FMCG (0.32 pc) and Energy (0.23 pc).
However, Relaty, Healthcare and PSU Bank witnessed good buying support.
Major laggards were Infosys, Tata Motors, Sun Pharma, L&T, ITC, HDFC, Kotak Bank, Axis Bank, Zee, Ultracemco, HDFC Bank, Wipro, Bosch, Bharti Airtel, Coal India, Vedanta, Asian Paints, Reliance and ONGC.
Dr Reddys, Idea, Adani Ports, Lupin, TCS, HUL, TechM, Yes Bank, SBI and Grasim were among the notable index gainers.
Turnover in the cash segment dropped to Rs 14,179.93 crore compared to Rs 19,829.96 crore last Thursday.
A total of 6,936.39 lakh shares changed hands in 7,562,209 trades and the total market capitalisation of NSE stood at Rs 93,46,468 crore.
