The S&P BSE Sensex tanked 12 per cent, or 3,600 points, to 26,260 levels. The Nifty50 index fell 1,032 points, or 11.82 per cent, to 7,700.
Although the markets saw across-the-board selling, bank and auto stocks were the worst-hit.
The Nifty Bank index was down over 15 per cent. Axis Bank tumbled 19 per cent and IndusInd Bank was down 18 per cent. ICICI Bank slumped 15 per cent.
In the broader market, the S&P BSE MidCap index was trading with 6.9 per cent cut and the S&P BSE SmallCap index was down 9.4 per cent.