The major leading stocks tumbled in opening trade on weak global cues. An unexpected contraction in the service sector in the US once again sparked fears the economy may sink into recession. Infosys and Bharti Airtel slipped. IT and metal stocks suffered the most. Market breadth was extremely weak. All 30 stocks from the Sensex pack were in the red.
Liquidity may get a boost from huge refunds that investors have started getting from Reliance Power IPO though it remains to be seen how much money comes to secondary market in the light of immense volatility witnessed on the bourses last month.
Later, the current index of 30-share BSE Sensex was major down by 623.90 points or 3.34 per cent at 18,039.26. Sensex touched a low of 17,936.01 in initial trade. At day's low it shed 727.15 points.
The broader CNX S&P Nifty index of NSE also crashed by 179.60 points or 3.28 per cent at 5304.30.
The BSE Mid-Cap index slipped by 2.24 per cent at 7,890.88, while the BSE Small-Cap was down 1.69 per cent at 10,289.81.
India's largest private sector firm by market capitalization and oil refiner Reliance Industries fell 3.10 per cent at Rs 2534.80.
India's largest private sector bank by assets ICICI Bank fell 3.10 per cent to Rs 1152.95.
India's largest engineering and construction firm by revenue Larsen&Toubro fell 2.52 per cent to Rs 3759.90.
Among the other Sensex losers, Bharti Airtel slipped 5.24 per cent to Rs 886.95 followed by Infosys Technologies by 5.04 pc to Rs 1530, Wipro by 4.47 per cent to Rs 434, DLF by 4.38 per cent to Rs 851.05, TCS by 4.17 per cent to Rs 909, Housing Development Finance Corporation (HDFC) fell 4.39 per cent to Rs 2935, and Satyam Computers declined 4.59 per cent to Rs 418.10.
In Asia, key indices in Hong Kong, Japan and Singapore were down by 3.50 per cent to 5.40 per cent.
US stocks suffered their biggest drop in a year on Feb 5, after data showed the worst monthly contraction in the services sector since the last US recession and Standard and Poor's warned it could cut bank credit ratings.
The Dow Jones industrial average plunged 370.03 points, or 2.93 per cent, at 12,265.13. The Standard and Poor's 500 Index lost 44.18 points, or 3.2 per cent, at 1,336.64. The Nasdaq Composite Index tumbled 73.28 points, or 3.08 per cent at 2,309.57, brokers said.