Indian markets joined the global sell-off as the benchmark Sensex on Thursday suffered this year's worst single-day fall of 555 points to end at a 19-month low of 24,851.83 on sustained outflows, pulling down the rupee to more than a three-week low of 66.93 against the dollar.
On the other hand, gold regained the Rs 26,000-level to trade at a three-week high of Rs 26,330 per 10 grams.
In the forex market, the rupee weakened another 11 paise to close at over three-week low of 66.93 against the dollar due to heavy demand for the US currency from banks and importers amid a sharp fall in equities.
The index ended the day 2.18 per cent down at 24,851.83 as anxious investors sold off shares across all sectors, including realty, infrastructure, auto, metal, power and oil and gas.
This is the weakest closing for the Sensex since June 4, 2014, when it closed at 24,805.83.
The total market valuation of firms listed on BSE has been eroded by more than Rs 3 lakh crore so far this year amid heavy selling in stock markets owing to China growth worries.
The total investor wealth, measured in terms of collective value of all listed stocks, fell to Rs 96,91,131 crore, down from Rs 100.38 lakh crore at the end of last trading session of 2015.
Asian markets wallowed in deep red, with Shanghai shares crashing over 7 per cent, forcing authorities to suspend trading less than half an hour after opening as the new circuit-breaker tripped for the second time in a week.
This followed China's central bank devaluing its currency by 0.51 per cent to 6.5646 per cent against the dollar, the lowest since March 2011.
The fall came amid worries over a slowing growth in the world's second-largest economy, which has roiled investors worldwide, and pressure on its currency from capital outflows.
Global crude oil too slumped to multi-year lows to slip below the USD 34 per barrel mark following China's weakening currency and rising US energy reserve.
Maintaining its winning streak for the fourth straight day, gold regained the Rs 26,000-mark per 10 grams for the first time since December 12 by surging Rs 430 to close at Rs 26,330 per 10 grams in the national capital.
Gold in the global market also rallied to a three-week high of USD 1,102.85 an ounce in Singapore after China's devaluation of its currency and rising geo-political tension in West Asia added to its safe-haven appeal.
The broader NSE Nifty cracked below the 7,600-level by slumping 2.23 per cent, or 172.70 points, to 7,568.30 at the close.