Selling pressure was visible across the sectors. Banking, infrastructure, IT, realty and Pharma sector were the worst hit.
Tata Motors was the biggest loser in the Nifty-50 basket, down 6.18 per cent on China worries and weak December sales. Telecom stocks Idea Cellular and Bharti Airtel closed 5.3 per cent and 4 per cent lower respectively after the telecom regulator TRAI asked telecom operators to adhere to the call drop regulation with effect from January 1. PNB, Hindalco, Bank of Baroda, Yes Bank, HDFC, Bhel were the other big losers in the Nifty falling between 3.2-6 per cent each.
Out of the 50 stocks in Nifty, only four stocks managed to close in the green and 46 stocks ended with losses. HUL, Wipro, Asian Paints and HCL Tech were the only four gainers in the Nifty.
Broader markets, which have been outperforming frontline indices in last few days, also succumbed to selling pressure. The BSE Midcap index closed 1.2 per cent lower while the BSE Smallcap index ended 1.1 per cent lower.
2.50 p.m.: Sensex, Nifty continued their slide in the last hour of trade. The Sensex fell over 560 points to below the 25,600 mark while the Nifty shed 180 points to 7,783.70.
Kunal Bothra, senior technical analyst at LKP securities told NDTV that it is important for Nifty to hold 7,850 levels, failing which, it may head to 7,650 levels again.
2.35 p.m.: Market expert Ajay Bagga told NDTV that there could be more selling pressure in China but Indian markets will be relatively protected as already correction has happened in the markets. Mr Bagga expects further stimulus in China, which may help a recovery in Chinese market.
2.10 p.m.: Indian markets continue to bleed after China selloff spooked global markets. The Sensex was down 520 points at 25,640 while the Nifty hovered around the 7,800 level. The rupee also fell to fresh intraday low of 66.58 per dollar.
European shares also feel the heat of China selloff. The FTSE 100 index was down 1.6 per cent while France's CAC 40 slumped nearly 2 per cent.
1.40 p.m.: Sensex slumps over 500 points to 25,641.85 while the 50-share Nifty falls over 2 per cent, below the key 7,800 mark. Selling pressure was seen across the sectors. Market breadth was negative; as 1,654 shares traded with losses while 1,097 shares advanced.
Tata Motors continued to be the top loser in Nifty with nearly 6 per cent cut. HUL advanced nearly 1 per cent.
1.30 p.m.: The rupee makes fresh intraday low, trades at 66.53 against the dollar, down 0.57 per cent.
1.15 p.m.: Sensex at day's low, slumps 485 points to 25,676 while the Nifty fall over 150 points to 7,808.65. Selling pressure was seen across the sectors. Banking, metals, pharma and IT stocks came under selling pressure as traders booked profit in recent gainers.
Smallcap and midcap shares also witnessed profit booking. The BSE Smallcap index was down 1.24 per cent and the BSE Midcap index fell 1.47 per cent.
1.05 p.m.: Ashok Leyland trades 2.93 per cent higher at Rs 91.40. The company reported strong sales for the month of December. (Read)
12.50 p.m.: Punj Lloyd shares trade 4.5 per cent higher at Rs 30.05. The stock surged over 9 per cent to a high of Rs 31.40 earlier in the day after it said that it has bagged four highway contracts worth Rs 1,555 crore in the states of Bihar, Chhattisgarh, Odisha and Punjab.
12.30 p.m.: Sensex falls 418 points to trade at 25,743 and the Nifty slumps 134 points to 7,829.45. Tata Motors shares fall 5.3 per cent to be the top loser in Nifty on concerns of slowdown in China and December sales.
Bharti Airtel and Idea Cellular lost over 4 per cent each after the Telecom regulator asked operators to ensure compliance with call drop regulations, with effect from January 1. Bank of Baroda, Yes Bank, HDFC, Lupin, PNB, Ultratech Cement and ICICI Bank were the other prominent losers in the Nifty.
Cairn India was the top gainer in the index with nearly 3 per cent gains. Power Grid, HUL, Asian Paints, Wipro, NTPC and Tata Steel outperformed the broader indices with marginal gains.
12.00 p.m.: The rupee trades at 66.45 against the US dollar after falling to a low of 66.50 during the day.
11.40 a.m.: Sensex continued to be under pressure, down 409 points at 25,751. The 50-shares Nifty sheds over 1.61 per cent or 130 points to 7,829.55. Among sectoral indices, banking stocks extended selloff. The Bank Nifty was down 2.16 per cent. Pharma, FMCG, IT and infrastructure shares also came under selling pressure.
In the Nifty-50 basket, Idea cellular was the top loser down over 5 per cent. Tata Motors, Bharti Airtel, Bank of Baroda and Yes Bank were the other big losers in the Nifty, down between 3-4.5 per cent each. Among the 50 shares in Nifty, 42 shares traded in red while only 8 shares were in green.
11.15 a.m.: Sensex slumps over 400 points tracking selloff in China shares. Trading on the Shanghai and Shenzhen stock markets was halted for the day on Monday after shares fell seven per cent on weak manufacturing data. (Read)
10.45 a.m.: Indian markets extend selling pressure after a survey said that India's manufacturing activity contracted in December for the first time in more than two years, hurt by softening demand. Sensex slumps over 300 points to 25,855 and the Nifty is down nearly 100 points to 7,867.8.
Nikkei's Manufacturing Purchasing Managers' Index, compiled by Markit, fell to a 28-month low of 49.1 in December from November's 50.3.
It was also the first reading below the 50 threshold that separates growth from contraction since October 2013.
Banking shares witness the heat of selling pressure. The Bank Nifty is down 1.63 per cent. ICICI Bank, Kotak Mahindra Bank and Yes Bank were among the top banking losers, down between 1.6-2.2 per cent each.
10.15 a.m.: Sensex falls over 250 points to break below 25,900 and the 50-shares Nifty down over 80 points to 7,878. Banking and telecom stocks came under sharp selling pressure. The Bank Nifty is down 1.54 per cent.
Among the Nifty 50 stocks, Idea Cellular and Bharti Airtel fall over 2 per cent each to be the top two losers in the index. Banking stocks like ICICI Bank, Kotak Mahindra Bank and IndusInd Bank also fall between 1.5-2.2 per cent each. State-owned banks like Bank of Baroda, PNB and SBI fell over 1 per cent each to pressure the Nifty.
9.30 a.m.: After breaking the 26,000 level in the opening trade, the Sensex recover marginally to trade above the 26,000 mark, now down 154 points. The Nifty trades 49 points lower at 7,914. Banking and metal stock witness selling pressure.
Among the Nifty-50 stocks, Idea Cellular, Bharti Airtel, M&M, HDFC and ICICI Bank fall over one per cent each to be the prominent losers in Nifty. Cairn India surged nearly 2 per cent to Rs 141.30 as crude oil rebounded 3 per cent on Monday on Middle East tensions.
IRB Infra shares surged over 11 per cent to Rs 272 after the company bagged its biggest ever order worth Rs 10,000 crore to build South East Asia's longest tunnel in Jammu and Kashmir. (Read full story here)
9.15 a.m.: Sensex falls over 180 points to 25,970.65 while the 50-share Nifty sheds over 50 points to 7,902.55 in the opening deals. Banking, metal shares fall nearly 1 per cent each.
9.00 a.m.: Rupee opens lower at 66.25 per dollar against Friday's close of 66.14.
8.15 a.m.: The BSE Sensex and the 50-shares Nifty are likely to open lower on Monday as indicated by Nifty futures traded on Singapore Stock Exchange.
The Singapore Nifty or SGX Nifty is down 37 points or 0.47 per cent indicating a weak start for the Indian markets.
Sentiments are likely to be positive as foreign investors were net buyers of Indian shares on Friday. They bought cash shares worth Rs 228 crore while domestic investors were net sellers to the tune of Rs 81 crore.
Other Asian markets began their first trading session of 2016 on a weak note. Hong Kong's Hang Seng index falls over 2 per cent while the Japan's Nikkei sinks over 2.5 per cent. China's Shanghai Composite index sheds over 3 per cent.
Meanwhile, crude oil prices jumped over 3 per cent on Monday after Saudi Arabia's execution of a prominent Shi'ite Muslim cleric spurred regional anger and geopolitical tension.
(With agency inputs)