Mumbai, Jan 21 : The 30-share sensitive index (Sensex) of the Bombay Stock Exchange (BSE) plunged by over 1, 400 points on Monday.
Blue chips Reliance Industries Ltd and private lender ICICI Bank led the drop as stocks around Asia felt the heat of investor disappointment at a U.S. stimulus proposal, with markets concerned it may not prevent a recession.
Market players said the market was short of cash after India's largest initial public offering closed last week. As well, a fall of almost nine percent in the market last week sparked margin calls on investors.
Despite the Monday's steep fall some investors remained optimistic saying the markets would soon recover.
"At the moment people are selling because of which there will be a slowdown for a few days. But it might recover in eight to ten days. This is what I think. This is just temporary," said Vijay Parik, an investor.
While other common investors said the market had become crazy.
"This is not correction. This is a crazy market. They really play dirty politics and middle class are the losers of the money," said Kamlesh, another investor.
The sensex fell over 2,000 points to a low of 16,951.50 in afternoon trade, its lowest since September, and trade was briefly halted.
The market recovered after trading was resumed, and at 0931 GMT was down 8.06 percent at 17,481.60.
On the broader market, 2,664 stocks declined, outweighing just 115 gainers.
The broader 50-share NSE index provisionally ended 8.61 percent lower at 5,213.85 points.