The S&P BSE benchmak sensex tumbled by 314 points to close at 27,643.88 on fresh selling pressure from operators due to lower european advices following fears about earlier-than-expected US rate hikes.
Profit-booking ahead of the expiry of futures and options May contract on coming Thursday also affected the market sentimnent.
Key indices declined after comments from Federal Reserve Chairwoman Janet Yellen on last Friday indicated that the US Central bank is on track to raise interest rate this year which will reduce the attraction of risker assets.
The sensex resumed lower at 27,893.25 and hovered in a range of 27,903.29 and 27,614.32 before ending at 27,643.88 showing a sharp loss of 313.62 points or 1.12 pct from its last weekend's level.
The CNX Nifty also fell by 88.70 points or 1.05 per cent to finish at 8,370.25.
Foreign portfolio investors bought shares worth a net Rs 211.42 crore on last Friday as per provisional data while Domestic institutional investors (DIIs) bought shares worth a net Rs 237.62 crore as per provisional data released by the stock exchanges.
In the overseas, Asian stock markets were trading higher as key indices in Japan, China, Singapore and Taiwan ended higher by 0.07 pct to 3.35 pct. Stock markets in Hong Kong and South Korea were shut for a holiday.