Reversing the previous session's gains, the 30-share BSE barometer Sensex slumped 1,203.18 points or 4.08 per cent to finish at 28,265.31.
Similarly, the NSE Nifty tanked 343.95 points, or 4 per cent, to close at 8,253.80.
Global equities skidded as weak factory data from Asia and a steady rise in coronavirus cases pointed to the tough road ahead for the world economy.
Dismal auto sales numbers and reports of India missing its fiscal deficit targets by a wide margin further sapped investor confidence here, traders said.
Tech Mahindra was the top loser in the Sensex pack, crashing 9.21 per cent, followed by Kotak Bank (8.81 per cent), TCS (6.23 per cent), Infosys (5.65 per cent), Axis Bank (5.50 per cent) and SBI (5.26 per cent).
Hero MotoCorp, Bajaj Auto, Bajaj Finance and Titan were the only gainers, spurting up to 2.21 per cent.
According to traders, domestic equities plunged in tandem with global stocks as no respite from the coronavirus pandemic seemed in sight.
Extensive lockdowns to contain the spread of the virus have severely hit business outlook, they said.
Around the world, total number of infected cases surged past 8.6 lakh, while deaths have crossed 42,000.
The number of Covid-19 cases in India climbed to 1,637, while the death toll rose to 38, according to the Health Ministry.
"The first day of the financial year started off on a negative note, impacted by the negative global markets and also domestic uncertainties with regards to banks' stressed assets and auto numbers.
"FIIs have net sold around Rs 62,000 crore in Equity in March and with virus infections increasing, markets are anticipating a worsening of the situation," said Vinod Nair, Head of Research at Geojit Financial Services.
All sectoral indices ended with losses. BSE IT, teck, bankex, telecom, finance, FMCG and power indices fell up to 5.58 per cent.
Broader BSE midcap and smallcap indices ended up to 2.18 per cent lower.
Domestic auto majors like Maruti Suzuki and Hyundai reported up to 47 per cent decline in March sales, hit by the coronavirus-triggered lockdown and weak consumer sentiment.
On the global front, Asian markets ended in the red after a slew of weak factory output data from countries like South Korea and Japan.
Bourses in Hong Kong, Tokyo, Seoul and Shanghai plunged up to 4 per cent. Benchmarks in Europe were also trading with significant losses.
Brent crude futures, the global oil benchmark, plunged 5.20 per cent to USD 24.98 per barrel. ANS ABMABM