Equity benchmark indices continued to slump in early trade on April 16 on fears of escalating tensions in the Middle East and weak global trends.
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Foreign fund outflows and uptick in Brent crude oil prices also dented investors' sentiment.
Continuing its downtrend for the third day running, the 30-share BSE Sensex tanked 585.63 points to 72,814.15. The NSE Nifty declined 168.65 points to 22,103.85.
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From the Sensex basket, IndusInd Bank, Infosys, Bajaj Finance, Kotak Mahindra Bank, Bajaj Finserv, NTPC, Tata Consultancy Services, and ICICI Bank were the major laggards.
Titan Company, Mahindra & Mahindra, Nestle, and Maruti were among the gainers.
In Asian markets, Seoul, Tokyo, Shanghai, and Hong Kong were trading lower.
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Wall Street ended in negative territory on Monday.
"Market sentiment was impacted by higher-than-expected inflation data and tensions between Iran and Israel," said Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd.
Global oil benchmark Brent crude climbed 0.58% to $90.62 a barrel.
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Foreign Institutional Investors (FIIs) offloaded equities worth ₹3,268 crore on Monday, according to exchange data.
The market is more concerned about the geopolitical issue, said V.K. Vijayakumar, Chief Investment Strategist, Geojit Financial Services.
"Israel's military chief's statement that "there will be a response to Iran's attack on Israel" has increased the probability of escalation of tensions in the Middle East. We don't know the timing and the nature of the Israeli response, which can be totally unexpected. This is likely to keep the markets weak in the near-term," Mr. Vijayakumar added.
The BSE benchmark tanked 845.12 points or 1.14% to settle at 73,399.78 on Monday. The NSE Nifty declined 246.90 points or 1.10% to finish at 22,272.50.