Equities across the globe came under intense selling pressure Friday and the Indian market was no exception as the benchmark BSE Sensex plunged 242 points to 27,366.07, its lowest closing in over two months.
At one point, the index was down over 450 points, tracking massive sell-off in other Asian markets after weak factory output data stoked fears about China's slowing economy.
Besides, escalating tension between South Korea and North Korea and weakness in emerging market currencies too stifled new bets in the domestic market.
Consequently, the wider NSE Nifty crashed below the 8,300- mark by tumbling 72.80 points or 0.87 per cent to 8,299.95.
Intra-day it moved between 8,225.05 and 8,322.20.
Foreign investors also didn't help as they pulled out Rs 1,007.26 crore from local markets Thursday.
Meanwhile, the rupee depreciated to a two-year low of 65.91 (intra-day) against the dollar.
The BSE Sensex after resuming lower at 27,440.10, continued to slide and touched day's low of 27,131.44.
However, it recouped nearly half of early losses in late afternoon on emergence of buying after A P Shah panel on MAT on FIIs recommended giving relief to foreign investors from levy of tax for the period prior to April 1, 2015.
Finally, the index settled 241.75 points or 0.88 per cent down at 27,366.07, its lowest closing since June 19.
Vedanta was the biggest BSE loser as it slumped 3.81 per cent, followed by Bajaj Auto (3.40 pc), Hero MotoCorp (2.81 pc) and GAIL (2.75 pc).
Shares of realty, auto, capital goods, banking, power, oil&gas and metal were among the major laggards of the day.
On a weekly basis, the Sensex lost 701.24 points and the NSE Nifty plunged by 218.60 points.
Overseas, Key indices in Japan, China, Hong Kong and Taiwan were off between 1.53 per cent and 4.27 per cent.
Meanwhile, a survey showed that China's factory sector shrank at its fastest rate in more than six years in August.
European stocks were trading lower too.
US stocks suffered their worst sell-off in 2015 by falling 2.06 per cent in Thursday's trade as markets were buffeted by worries about a slowdown in global growth.