The BSE benchmark Sensex tumbled by 361 points at 1100 hrs on selling pressure in view of political worries after Dravida Munnettra Kazhagam (DMK), a key ally of the Congress-led UPA government at the Centre, said that it is pulling out of the government.
A rally in crude oil prices and weak Asian stocks also weighed heavy on the investor sentiment.
Auto stocks declined on worries that the government may hike fuel prices as crude oil prices surged to cross the USD 106 per barrel mark to touch a 29-month high.
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Hike in fuel prices and a possibility of further increase in interest rates to tame inflation may dent the demand for vehicles, traders said.
Major losers were Reliance Com (2.52 per cent), Tata Motors (3.45 per cent), M&M (2.52 per cent), Maruti Suzuki (2.82 per cent), Jaiprakash Asso (2.68 per cent) and Jindal Steel (2.68 per cent).
The BSE benchmark Sensex fell by 361 points or 1.95 per cent to 18,125.45 at 1100 hrs from the last weekend’s close.
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The NSE 50-share Nifty also fell by 84.20 points or 1.52 per cent to 5,454.55 from its last close.
Most Asian stocks fell in the early trade on worries that a further rise in oil prices may temper risk—taking and start eating into corporate profitability.
Key benchmark indices in Hong Kong, Japan, South Korea and Taiwan fell between 0.21 per cent to 1.23 per cent while indices in China, Indonesia and Singapore rose between 0.02 per cent to 1.44 per cent.