The Nifty50 on the National Stock Exchange also fell over 300 points to end below the psychological 9,000 mark.
The indices were weighed down by heavy selling pressure in banking and finance stocks. The S&P BSE Banking index fell 6.69 per cent and the BSE Finance index was down 6.65 per cent.
The Sensex closed at 30,069.93, lower by 1,027.80 points or 3.31 per cent from the previous close of 31,097.73.
It had opened at 31,248.26 and touched an intra-high of 31,248.26 and a low of 29,968.45 points.
The Nifty50 closed at 8,823.25, lower by 313.60 points or 3.43 per cent from the previous close.
The major losing stocks on the Sensex were IndusInd Bank (down 10.02 per cent), Ultratech Cement (down 7.59 per cent) and HDFC (7.55 per cent), while the only gainers on the Sensex were TCS (up 2.72 per cent), Infosys (up 1.73 per cent).