Market benchmark Sensex nosedived by almost 546 points to 28,251.31, while Nifty broke below the 8,700-level in the opening trade on 12 September on heavy selling after revived speculation about a possible US rate hike.
Moreover, the rupee depreciating by 25 paise to 66.93 against the dollar in opening trade at the forex market also had a bearing on the sentiment.
Investors also turned cautious ahead of macroeconomic data - IIP for July and inflation data for August - scheduled to be released later in the day.
Consequently, the Sensex plunged by 545.94 points or 1.89 per cent to 28,251.31 with all the sectoral indices led by realty, infrastructure, banking and auto, tumbling by up to 2.74 per cent. The gauge had lost 248.03 points in the previous session on Friday.
On similar lines, the National Stock Exchange index Nifty dropped by 167.30 points or 1.88 per cent to 8.699.40.
Sentiment suffered a jolt following a meltdown in global equities on renewed speculation about a possible US rate hike, dragging down the key indices.
Most of the 30-Sensex constituents led by ICICI Bank, Hero Motocorp, Tata Motors, Axis Bank, Tata Steel, M&M, L&T, SBI, Adani Ports, Bajaj Auto, ONGC, Maruti Suzuki, Asian Paint,HDFC Ltd and HUL were trading in negative zone, falling by up to 3.36 per cent.
In Asian region, Hong Kong's Hang Seng tumbled 2.83 per cent, Japan's Nikkei down 1.51 per cent while Shanghai Composite Index fell 2.06 per cent.
The Dow Jones Industrial Average ended 2.13 per cent lower in Friday's trade.