A set of weak GDP numbers, along with downbeat global macros, sent markets reeling on Tuesday, with the benchmark BSE Sensex plunging a steep 587 points to close at over 1-year low as selling spread.
The growth data, which came in after market hours on Monday, showed the economy grew at 7 per cent in April-June, from 7.5 per cent in the preceding quarter.
Not just that, Nikkei India Manufacturing PMI stood at 52.3 in August, as against 52.7 in July, a sign that the sector grew at a slower pace.
Things were no better in China, with two manufacturing PMIs, including a government one, reinforcing fears that the Chinese economy is cooling more sharply than expected.
The BSE 30-share was bound for south, hitting a low of 25,579.88 before ending at 25,696.44, down 586.65 points, or 2.23 per cent.
The NSE Nifty too ended below the key 7,800-mark, tumbling 185.45 points, or 2.33 per cent, at 7,785.85.
Sentiment stayed decidedly muted after IMF MD Christine Lagarde's predicted a moderate global growth. "This reflects two forces: a weaker than expected recovery in advanced economies, and a further slowdown in emerging economies, especially in Latin America," Lagarde, on a trip to Indonesia, added.
"Markets shut the day with severe cuts on the back of weak global and domestic macro data. China?s weak PMI and India?s lower GDP growth dampened sentiment. Sell-off was mainly triggered by banks, especially PSU ones, on concerns of pressure on margins," said Gaurav Jain, Director, Hem Securities.
Chances of a possible interest rate hike by the US Fed and global crude showing signs of a tick-up ensured there was more pain for already battered Asian stocks.
The selling was across the board, with banking taking a big hit after HDFC Bank lowered its base rate, sparking fears that others may follow suit, which could pressure margins.
Other than banking, metal, realty, capital goods, PSU, auto and consumer durables took severe beating.
Axis Bank lost heavily, down 5.24 per cent, followed by Hindalco, Tata Steel and BHEL.
The BSE small-cap and mid-cap indices were not left untouched, losing 2.17 per cent and 1.96 per cent, respectively.
China's Shanghai Composite dived 1.23 per cent.
European markets too were down in their opening trade.
Japan's Nikkei led the Asian share slump, falling 3.84 per cent, while Hong Kong's Hang Seng slumped 2.24 per cent.
Sun Pharma was the only bright spot, up 0.34 per cent.
Meanwhile, foreign investors net sold shares of Rs 551.19 crore on Monday, according to provisional data.
Pramit Brahmbhatt, Veracity Group CEO, said: "Today local equities traded weak and lost over two per cent taking cues from the global sell-off, which forced Nifty to trade as low as 7,747."
The red mark was all over as 29 out of the 30-share Sensex pack ended with losses.
The market breadth remained negative as 2,082 stocks closed lower, 612 stocks higher while 89 ruled steady. The total turnover rose to Rs 2,525.57 crore from Rs 2,199.30 crore on Monday.
"The world equity markets are losing ground across developed and EMs due to further consolidation in the Chinese economy. Additionally, FIIs are also concerned about the upcoming FOMC meet to decide the US Fed rate," said Vinod Nair, Head-Fundamental Research, Geojit BNP Paribas Financial Services.