S&P BSE Sensex tumbled 600 points to below 36,100 level around in the afternoon session taking cue from global markets and over rising worries of economic recovery.
BSE was at 36,054 at 14:28 IST. All major stocks were trading in red, with banks and financials being worst-hit.
The broader Nifty50 index also slipped below the 10,650 levels, dragged by banking stocks. The trend among Nifty sectoral indices was negative, led by Nifty Bank index, down 3 percent.
Worries over the rise in cases and staggering economic recovery pressed on stock markets on Tuesday. India also released WPI data on Tuesday.
The wholesale price-based inflation declined 1.81 percent in June due to a decline in prices of fuel and power, even as food articles remained expensive.
The rate of deflation in May was 3.21 percent.
The rupee fell 16 paise to 75.35 against the US dollar in opening trade on Tuesday tracking weak domestic equities and strengthening American currency.