Market continued to feel the risks from yuan devaluation as the benchmark BSE Sensex extended its loses for the fourth straight session to fall by 384 points on Wednesday, while no positive developments on key reform bills added to the rout.
Taking no comfort from sharp correction in global stocks, the barometer index slipped to 27,512.26, its lowest closing since July 28.
The yuan has fallen almost 4 per cent in last two days, leading to industries including steel, engineering products and textiles anticipating a hit from the Chinese central bank's move to devalue its currency to boost exports.
A weaker yuan is also expected to pressure other central banks in the region to devalue their currencies to keep their exports competitive against China, brokers said.
Taking a hit, the rupee tumbled by 60 paise to nearly two-year low at 64.78 against the dollar today.
"Markets nosedived on global weakness which was caused on fears of further devaluation of China currency yuan... it seems unlikely to pass GST bill in this Monsoon Session of Parliament," said Gaurav Jain, Director, Hem Securities.
The 30-share Sensex plunged 353.83 points or 1.27 per cent to close at 27,512.26. It had lost 432.04 points in the previous three straight sessions.
Of the 30-share Sensex pack, 23 lost while 7 gained.
NSE Nifty index went below the crucial 8,400-mark before settling lower 112.90 points or 1.33 per cent at 8,349.45.
Shares of realty, metal, refinery, banking, auto, power, capital goods and FMCG declined sharply on heavy selling.
But IT was the silver lining as Infosys, TCS and Wipro rose up to 3.39 per cent, backed by a firming dollar.
Globally, stock markets remained shaky after China lowered the value of its currency for the second day in a row, aggravating worries about the health of the world's number two economy.
"Yuan?s surprise devaluation for the second day has stoked fears of a competitive devaluation, at least among emerging economies and has thrown the currency dynamics into a fresh flux," said Anand James, Co Head Technical Research Desk of Geojit BNP Paribas.
All major indices in Asia ended lower while those in Europe were quoting in the red in early trade.
Asian stocks ended lower on Wednesday as key indices in South Korea, Taiwan, Indonesia, Japan and Singapore were off by 0.56 per cent to 2.90 per cent. In mainland China, the Shanghai Composite was off 1.06 per cent and in Hong Kong, the Hang Seng index lost 2.38 per cent.
Key benchmark indices in the UK, France and Germany were off 1.37 per cent to 2.63 per cent.
Pramit Brahmbhatt, Veracity Group CEO said: "Today also China allowed Yuan to trade lower and lost almost 4 per cent in two days to trade at its weakest level since August 2011.
This boosted the appeal of top rated government bonds and dented the sentiments of equity market to trade low."
Vedanta fell by 8.03 per cent, followed by Hindalco 7.21 per cent, Coal India 5.53 per cent, SBI 4.77 per cent, Tata Motors 3.92 per cent, ICICI Bank 3.39 per cent, Bajaj Auto 3.13 per cent, M&M 3.09 per cent, BHEL 2.66 per cent, HUL 2.59 per cent and RIL 2.41 per cent.
However, Infosys rose by 3.59 per cent, followed by Sun Pharma 2.90 per cent, TCS 2.63 per cent, Wipro 1.75 per cent, Lupin 1.28 per cent and Dr Reddy's 1.08 per cent.
Among the BSE sectoral indices, realty fell 5.42 per cent followed by metal 4.37 per cent, oil&gas 3.42 per cent, bankex 3.02 per cent, auto 2.54 per cent, power 2.12 per cent and capital goods 2.06 per cent.
Small-cap and mid-cap indices also dropped by 2.13 per cent 2.49 per cent, respectively on sustained selling from retail investors.
However, IT jumped sharply by 2.59 per cent, teck 1.72 per cent and consumer durable 0.83 per cent.
The market breadth remained negative as 2,148 stocks closed lower, 691 stocks finished higher while 122 stocks ruled steady. Total turnover fell to Rs 3,595.61 crore from Rs 3,888.80 crore on Tuesday.
Foreign investors sold shares worth Rs 736.81 crore on Tuesday as per provisional data.