The last time Indian stock indexes dropped as much was at the height of the global financial crisis in 2008
The Indian stock markets plunged into bear territory on Thursday after the coronavirus outbreak was described a pandemic and the United States suspended travel from Europe, fanning fears of further disruption to the global economy.
The Nifty plunged 8.3 percent to 9,590.15, its lowest close in 2-1/2 years, while the Sensex also slid about 8 percent to a near two-year low of 32,778.14.
The last time Indian stock indexes dropped as much was at the height of the global financial crisis in 2008.
The virus outbreak heightened worries over the Indian economy, which was already slowing, with the recent collapse of a large private-sector lender adding to concerns over the country's financial sector.
"India entered 2020 with a massive demand problem, and that has been worsened now. This is a wash-out year for markets," said Yogesh Nagaonkar, chief executive of Mumbai-based Rowan Capital Advisors.
The rupee was weaker by 0.6 percent at 74.19 against the dollar, as of 1025 GMT, while the benchmark 10-year bond yield ticked up to 6.21 percent.
Global stocks too fell into a bear market and oil slumped after US President Donald Trump stunned markets with a travel ban from Europe to stem the virus.
India on Wednesday also suspended a vast majority of visas to the country to contain the virus.
The World Health Organization described the new coronavirus as a pandemic for the first time on Wednesday, adding that Italy and Iran were now on the frontline of the disease and other countries would soon join them.
On Thursday, European shares plummeted to their lowest in almost four years, while the S&P 500 futures indicated another tumble for the US stock markets. MSCI's broadest index of Asia-Pacific shares outside Japan fell 4.7 percent.
The selloff in Mumbai was driven by large-cap energy and financial shares. The Nifty 50 and the Sensex have fallen over 20 percent from their most recent peak on Jan. 20, confirming a bear territory.
Top private-sector lender HDFC Bank Ltd caused the biggest damage to the indexes, diving 8.3 percent to its lowest close in more than a year.
Oil-to-retail conglomerate Reliance Industries Ltd plunged 7.9 percent to its lowest close in more than 16 months.
Fund managers and market analysts said the bulk of selling came from foreign institutional investors.
"There has been some pullout of the easy money and liquidity that were driving markets higher so far," said Mahesh Patil, co-chief investment officer at Aditya Birla Sun Life AMC in Mumbai, whose team manages some $12 billion in equities.
"We don't know where the bottom is."