The volatility seen in early trades was merely a preview of what was to follow. After recovering from the early decline, the indices crashed again by noon. The Sensex gave up more than 300 points and went very close to 11000. The Nifty slipped below 3300 before recovering.
Buying at lower levels has helped the markets to regain part of the lost ground.
The Sensex is trading lower by 147 points at 11209 at 01.10 PM.
The Nifty is trading lower by 32 points at 3348.
Engineering stocks were the worst hit in today's slump. ABB lost nearly 8 per cent by noon before recovering. The stock is now trading nearly 6 per cent lower. Siemens has lost 4.5 per cent while L&T has given up 3.5 per cent. BHEL is trading lower by more than 2.5 per cent.
Cipla saw a sharp fall and was trading more than 11 per cent lower before recovering. The stock is now trading more than 5 per cent lower.
VSNL has lost further ground and is trading more than 5.5 per cent lower. MTNL has given up more than 4 per cent while Reliance Communication has lost over 3.5 per cent.
Zee Tele has also declined further and is trading 4 per cent lower.
Cement stocks have come under pressure. Grasim has given up over 3.5 per cent. ACC is trading 3 per cent lower while Gujarat Ambuja is lower by a per cent.
Among metal stocks, Sterlite saw a sharp slide and was trading lower by more than 17 per cent at one point. The stock has recovered and is trading more than 7 per cent lower.
Nalco has given up more than 3.5 per cent. SAIL and Tata Steel are also trading lower.
Tata Chemicals, IPCL, Bajaj Auto, SBI, ICICI Bank, and Satyam are among the other losers.
Maruti has rallied in early afternoon trades after the company said it would buy out parent company Suzuki's stake in the car assembly JV. The stock is trading more than 2.5 per cent higher.
Dr Reddy's has given up part of its early gains and is trading more than 2.5 per cent higher.
Reliance Industries gave up all its early gains before recovering and gaining again. The stock is now trading more than 2 per cent higher, providing some support to the indices.
TCS is holding on to its early gains of over a per cent. Among other tech stocks, Wipro has added 0.5 per cent.
Mid-caps are doing worse than the large caps. The mid-cap index gave up more than 3.5 per cent at one point before staging a modest recovery. The index is trading with losses of more than 2.5 per cent. Market breadth is extremely negative with nearly 8 declining stocks for every advancing stock on the NSE.
Kewal Kiran Clothing, which got listed on the exchanges today, is trading at Rs270.
Rohit Ferro Alloys, another new listing today, is trading at Rs32.90.
Precot Mills, Pidilite and SKM Egg Products are among the major gainers in mid-caps.
Shivalik Global, Malu Paper and Mirc Electronics are among the mid-cap losers.