Market benchmark Sensex failed to capitalise on early momentum and plunged over 362 points today to end at 23,191.97, dragged down by profit-booking amid contraction in exports last month.
The broader NSE Nifty too struggled and settled below the crucial 7,100-level.
Sentiment took a hit after country's exports dipped for the 14th month in a row, down 13.6 per cent in January to USD 21 billion due to fall in petroleum and engineering goods shipments, even as trade deficit showed improvement.
The BSE index, earlier backed up by a firming trend in Asian markets and yesterday's strong performance, succumbed to profit-booking and ended at 23,191.97, down 362.15 points or 1.54 per cent. The gauge had gained 602.29 points in the last two sessions.
The NSE Nifty closed lower by 114.70 points or 1.60 per cent at 7,048.25.
"Early gains were wiped-off as traders indulged in profit-booking," said Deepak Pahwa, a Delhi-based broker.
Profit-booking was so strong that as many as 26 stocks out of the 30-share Sensex pack tumbled.
Country's largest lender, SBI shares were the worst hit as it plunged by 6.49 per cent, followed by Tata Motors (4.88 per cent), BHEL (4.35 per cent) and GAIL (3.76 per cent).
L&T, ICICI Bank, Cipla, Axis Bank, ITC, Sun Pharma, Lupin, Asian Paints, Coal India, RIL, M&M, Bharti Airtel, Infosys, Tata Steel and Bajaj Auto also saw selling pressure.
But Adani Ports, NTPC, Dr Reddy's and Wipro ended higher.
Sectorwise, the BSE capital goods suffered the most by falling 3.06 per cent followed by realty (3.03 pc), oil&gas (2.32 pc), healthcare (2.27 pc), PSU (2.23 pc) and banking (2.11 pc).
Broader markets also plunged, with the mid-cap index falling 2.43 per cent and small-cap dropping 2.25 per cent.
Regional markets were mostly higher with China's Shanghai composite index rising by up to 3.10 per cent, while Europe was showing mixed trend.