The BSE Sensex sank 224.33 points to end near two-week low of 37,644.90, while the Nifty crack below the 11,400-mark, losing 73.75 points to end at 11,355.75 on fresh foreign fund inflows.
A massive selling pressure was seen in banks, financials and PSU shares as the rupee nosedived to all-time low of 69.85 (intra-day) per dollar amid fresh fall in the Turkish lira, fuelling demand for safe havens.
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SBI was the biggest loser in the Sensex pack, diving 3.17 per cent after the lender reported a hefty loss of Rs 4,876 crore for the June quarter.
Asian shares too tumbled and Europe opened lower after sell-offs on Wall Street last week. Investor sentiment took a hit following a slump in the Turkish currency lira on geopolitical developments, spreading panic globally, brokers said.
Traders also appeared cautious ahead of consumer inflation data for July to be announced later in the day today. While the wholesale price inflation (WPI) numbers will be announced tomorrow.
The Sensex, which resumed lower at 37,693.19, continued its slide and touched a low of 37,559.26 as selling intensified.
However, the benchmark recovered marginally on value-buying and covering-up of short positions. It ended at 37,644.90, down 224.33 points, or 0.59 per cent.
The gauge had lost 155.14 in the previous session.
The broader NSE Nifty, after cracking the 10,400-mark, ended 73.75 points, or 0.65 per cent, lower at 11,355.75.
Sectoral indices led by oil and gas, PSU, financial, energy, banking, infrastructure, power, metal, realty, auto and capital goods ended in the negative terrain, falling by up to 1.93 per cent.
Vedanta, ONGC, HDFC, Reliance Industries, HUL, Asian Paints, Power Grid, NTPC, Tata Motors, Maruti Suzuki, Hero Motorcorp, Adani Ports and Tata Steel contributed the most to the losses in the 30-share Sensex pack.
However, IT and teck stocks ended in the positive zone as the rupee fell.
Foreign funds sold shares worth Rs 510.66 crore, while domestic institutional investors bought equities worth Rs 457.83 crore on Friday, provisional data showed.