"During the entire first half, Nifty consolidated around the 10400 mark; however, the second half turned out to be extremely brutal as we witnessed a complete nosedive to fall more than 200 points from morning high...Going ahead, any bounce back towards 10,300 - 10,360 would be seen as a selling opportunity," said Sameet Chavan (Chief Analyst-Technical and Derivatives, Angel Broking.
The top drags in the 30-share Sensex pack were Sun Pharma (down 2.95 per cent), State Bank of India (down 2.77 per cent), ICICI Bank (down 2.64 per cent), Mahindra & Mahindra (down 2.52 per cent) and Maruti Suzuki (down 2.05 per cent). However, IndusInd Bank (up 1.21 per cent), Tata Steel (up 0.79 per cent), Hero MotoCorp (up 0.35 per cent) and Coal India (up 0.31 per cent), were the only gainers in the Sensex.
Among the sectoral indices, the BSE Telecom index was the biggest loser led by Tejas Networks (down 5.18 per cent), Reliance Communications (down 5.05 per cent), and GTL Infra (down 4.07 per cent). On the Nifty, the Nifty PSU Bank index lost 2.87 per cent to end at 2,936.35 points.
The banking index is now poised for further weakness towards 24,200 - 24,000 levels, said Mr Chavan. "It would be very interesting to see how PSU banking basket behaves as the 'Nifty PSU bank' index has closed around its major support level of 2928. Hence, traders need to keep a close eye on this development as well," he added.
Meanwhile in Europe, Germany's DAX was trading at 12,218.80, with a gain of 127.93 points and France's CAC 40 was at 5,202.14 with a gain of 34.92 points.
In Asia, Japan's Nikkei 225 closed at 21,417.76 with a gain of 375.67 points, China's Shanghai Composite Index ended at 3,289.64 up 32.72 points and Hong Kong's Hang Seng ended 624.34 points higher at 30,510.73 points.
Overnight, on the Wall Street, the Dow Jones Industrial Average rose 336.7 points, or 1.37 per cent, to 24,874.76, the S&P 500 gained 1.10 per cent while the Nasdaq Composite added 1 per cent.