Equity benchmark Sensex plunged 886 points on Thursday, tracking heavy losses in index heavyweights Reliance Industries, HDFC twins, Infosys and ICICI Bank amid a selloff in global markets.
Further, market players were disappointed as the immediate spend out of the government's Rs 20 lakh crore fiscal stimulus package was seen to be relatively small, raising doubts about the revival of growth any time soon, experts said.
After crashing over 955 points during the day, the 30-share index settled 885.72 points or 2.77 per cent lower at 31,122.89.
Similarly, the broader NSE Nifty tanked 240.80 points, or 2.57 per cent, to 9,142.75.
Tech Mahindra was the top laggard in the Sensex pack, cracking over 5 per cent, followed by Infosys, HDFC, IndusInd Bank, Reliance Industries and NTPC.
On the other hand, Hero MotoCorp, L&T, Maruti, UltraTech Cement and Sun Pharma led the gainers' chart.
Indian market opened on a negative note following overnight negative close in US markets as the Fed warned that the coronavirus crisis raises longer-term growth concerns and could result in an extended period of low productivity growth and stagnant incomes, said Narendra Solanki, Head- Equity Research (Fundamental), Anand Rathi.
Further, investor reaction to the first set of measures in the relief package announcement by Finance Minister Nirmala Sitharaman was mixed and traders await follow up announcements, he noted.
"During the afternoon session, market further weakened as truncated WPI data added to the pessimism," he said.
As per data released by the Commerce and Industry Ministry, wholesale price index (WPI) deflation in primary articles was 0.79 per cent in April, as against an inflation of 3.72 per cent in March.
The fuel and power basket saw a deflation of 10.12 per cent in April, against 1.76 per cent deflation in the previous month.
Meanwhile, Asian markets were in the red after the World Health Organization warned that the coronavirus "may never go away".
On top of that, US Federal Reserve chief Jerome Powell warned of a "highly uncertain" outlook for the world's top economy.
Bourses in Shanghai, Hong Kong, Tokyo and Seoul closed with losses. Stock exchanges in Europe were also trading on a negative note in early deals.
International oil benchmark Brent crude futures surged 3.85 per cent to USD 30.32 per barrel.
On the currency front, the rupee slipped 10 paise to provisionally close at 75.56 against the US dollar.
In India, the death toll due to COVID-19 rose to 2,549 and the number of cases climbed to 78,003, according to the health ministry.
Globally, the number of cases linked to the disease has crossed 43.47 lakh and the death toll has topped 2.97 lakh.
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