All the sectoral indices received a battering, with banking, metal, oil and capital goods indices shedding a whopping 3%-4% each.
The markets went into a tailspin, with both the Sensex and Nifty touching their lowest levels in this calendar year, as surging crude oil and domestic factors sent the participants scurrying for cover.
The BSE Sensex plunged more than 700 points to break below its crucial psychological level of 27,000 and the Nifty broke its crucial 200-DMA mark.
The Sensex ended at 26,717, lower by 722 points or 2.6% and the Nifty settled with losses of 227 points or 2.7% at 8,097.
In fact, the Nifty ended below 8,100 for the first time since Dec 17, 2014.
The broader markets also melted in tandem with the benchmark indices, with the BSE midcap index and smallcap index shedding 3.2% each at 10,265 and 10,829 respectively.
The extent of the carnage was so severe that there were four declining stocks behind every advancing stock and Bharti Airtel was the sole gainer among the Sensex-30 stocks.
The country's benchmark indices - the Sensex and the Nifty - after gaining nearly 30% in 2014 are trading in the negative this year even as other global peers have held the ground.
GLOBAL MARKETS
In overseas markets, the Asian stocks edged lower mirroring overnight sell-off in US stocks as investors were spooked by a vicious selloff in sovereign bonds globally. US stocks dropped on Tuesday after the latest data showed that the US trade deficit soared 43% in March, largely reflecting the end of a labor standoff at West Coast ports that allowed piles of imported goods sitting on docks to be processed and shipped to domestic customers.
The key indices in China, Hong Kong, Singapore, Taiwan, and South Korea shed between half a percent and 1% each.
However, the European indices, including the CAC, DAX and FTSE bounced back between half a percent to one percent each after cracking around 2% in the previous trading session.
CRUDE OIL
Oil prices rose on Wednesday to hold near 2015 highs, continuing a month-long rally supported by a weak dollar and a disruption to crude exports in Libya.
Brent crude for June delivery was 32 cents higher at USD 67.87 a barrel and the US crude for June delivery traded 50 cents higher at USD 60.90 a barrel.
DOMESTIC WOES The slow pace of reforms and slow movement on the passage of crucial bills are a matter of concern as important legislations such as land acquisition bill have hit the Parliamentary logjam.
On the positive side, the Lok Sabha has passed the landmark GST Bill this evening; however, it still has to clear the Rajya Sabha hurdle where the ruling NDA government does not have the required numbers.
RUPEE
The rupee slipped from its initial gains and dropped to 63.65 against the dollar on sustained dollar demand from banks and importers amid weak equities.
Earlier, the rupee had opened higher at 63.35 against yesterday's closing of 63.44 at the Interbank Foreign Exchange market. SECTORS AND STOCKS All the sectoral indices received a battering, with banking, metal, oil and capital goods indices shedding a whopping 3%-4% each. Banking heavyweights such as ICICI Bank, Yes Bank, Axis Bank, HDFC Bank and SBI shed 2-5% each.
And in the larger banking universe, Bank of India (BOI), Federal Bank, Kotak Mahindra Bank, Bank of Baroda (BOB), Canara Bank and Punjab National Bank were down more than 3% each.
The metal space saw profit-booking post the gains witnessed in the past two trading sessions. Jindal Steel nosedived by 8% at Rs 134, while Hindustan Zinc, Tata Steel and Hi ndalco lost 2-4% each.
Oil marketing companies such as Indian Oil Corporation (IOC) Bharat Petroleum Corporation (BPCL) and Hindustan Petroleum Corporation (HPCL) fell 3-6% each on the bourses as oil prices hit their highest for the year on Tuesday.
Among the heavyweights in this space, ONGC lost 3% and RIL lost 1.5% each. The capital goods space also had a rough ride, with L&T, BEML, BHEL and Siemens losing 4-7% each.
Bharti Airtel was the sole BSE Sensex-30 stock to buck the trend and close marginally in the green at Rs 388.
