Her are 10 things to know about today's selloff:
The Sensex ended 634 points or 1.63 per cent lower at 38,357 and Nifty 50 index fell 194 points or 1.68 per cent to close at 11,334.
Overnight on Wall Street, Dow Jones fell 2.78 per cent, S&P 500 index dropped 3.51 per cent and Nasdaq index plunged 5 per cent.
"When US and global markets shiver, domestic markets also bound to get affected. The index (Nifty) has still not recovered even half from the lowest level recorded in Monday's selloff," AK Prabhakar, head of research at IDBI Bank, told NDTV.
"Markets will give a fantastic time, but not now... We need to wait a bit," he said.
Losses in Reliance Industries, HDFC, ICICI Bank, Infosys and Axis Bank wiped out over 300 points from the Sensex.
All the 11 sector gauges compiled by the National Stock Exchange ended lower led by the Nifty Metal index's nearly 3 per cent fall. Banking, financial services, FMCG, information technology, energy and real estate shares also witnessed intense selling pressure.
Mid- and small-cap shares also witnessed selling pressure as the Nifty Midcap 100 index dropped 1.55 per cent and Nifty Smallcap 100 index fell 1 per cent.
Barring Maruti Suzuki all the Nifty 50 shares closed lower on the National Stock Exchange.
Tata Steel was top Nifty loser, the stock fell 4 per cent to close at Rs 421. Axis Bank, Adani Ports, JSW Steel, NTPC, Tata Motors, State Bank of India, Bharti Airtel, Grasim Industries, Dr. Reddy's Labs, UPL, IndusInd Bank and Wipro also fell between 2.3-3.8 per cent each.
The overall market breadth was extremely bearish as 1,723 shares closed lower while 1,003 ended higher on the BSE.