The Bombay Stock Exchange index, Sensex, which had gained 434 points in the previous session, was pulled down 310.04 points to 19,386.82 by the Infosys stock which has the second heaviest weight in the 30-share benchmark.
The broad-based National Stock Exchange index Nifty dropped by 86.95 points to 5,824.55, after touching the day's low 5,806.45.
Infosys plunged 9.59 per cent to Rs 2,988.80; the second major Tata Consultancy by 1.52 per cent to Rs 1,190.55 and third biggest Wipro fell the most in three months by dropping 5.04 per cent to Rs 449.60.
Meanwhile, March inflation rose to 8.98 per cent, from 8.31 per cent in the previous month, raising fears that RBI will raise policy rates to curb price rise.
The Reserve Bank of India had predicted last month that inflation would be 8 per cent by March, while it raised rates for the eighth time in a year. Oil prices were up 26 per cent from the year-ago period.
Banking stock came under selling pressure, with ICICI Bank falling 2.37 per cent to Rs 1,101.30 and HDFC Bank by 0.50 per cent to Rs 2,360.20.
There was some profit booking at front-runner stocks after the Sensex rallied 9.1 per cent in March, fanning the down-trend. A weak trend in the overseas markets was also a negative factor for the market.
The IT, teck, realty, banking, power, metal and refinery sectors were the major losers and kept the market down, while a better trend in stocks of auto, capital goods and consumer durable sectors capped the losses to some extent.
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