Equity benchmarks started the final week of the quarter on the back foot, extending losses for the fourth straight session, tracking a risk-off mood among investors leading to unrelenting pressure on global stocks as worries of elevated inflation and global recession continued to rise.
The NSE Nifty index crashed below 17,000 points and the BSE Sensex plunged more than 1,000 points as the bloodbath in markets extended from Friday. The rupee hit a new all-time low on Monday, marking the third straight session of record lows breached.
"Although India is seen as a bright spot in times of global slowdown concerns, domestic markets will not be completely insulated from overseas turmoil and would continue to see bouts of intra-day volatility," said Prashanth Tapse, Senior Vice President for Research at Mehta Equities.
Among the 30-share Sensex pack, Power Grid, Tata Steel, Maruti, Mahindra & Mahindra, NTPC, IndusInd Bank, Axis Bank and Titan were the major laggards in the early trade.
Nestle and Hindustan Unilever were the only gainers.
On Friday, the Sensex crashed over 1,000 points, and the NSE closed 1.7 per cent lower, with the selling pressure leading to an erosion of more than Rs 4 lakh crore in investors' wealth.
According to National Stock Exchange's preliminary data, foreign institutional investors (FIIs) sold net 29 billion rupees worth of Indian stocks on Friday.
"Because of Fed's move, lot of money that was coming to emerging markets will head back," Saurabh Jain, Assistant Vice-President for Research at SMC Global Securities, told Reuters.
Interest rate hikes in the United States and an aggressive policy stance by the Federal Reserve forced a dozen other nations to do so last week, underscoring global economic slowdown risks that has led to the onslaught of relentless sell-off in global equities.
Later in the week, the Reserve Bank of India is set to raise rates too, but by how much has split policy watchers widely.
As investors raced to keep up with the US Federal Reserve's interest rate projection, Asian stocks limped toward a fourth consecutive weekly loss on Friday, and bonds suffered significant losses.
A global stock index hit fresh year lows, and shares in Japan and Australia fell. Futures on US and European stocks declined.
"We're in a period of global gloom, with pessimism blanketing different countries for different reasons," Ed Yardeni, president of his eponymous research firm, who warned of growing storm clouds for the US economy, told Bloomberg.
"The latest data jibe with our growth recession scenario, but the risks of a full-blown recession are obviously increasing," he wrote in a note Monday.