The BSE Sensex slumped by 347 points on Monday on continued selling in blue chips on negative global cues and in anticipation of poor quarterly current account deficit (CAD) figures later in the day.
Markets showed concern over a possible shutdown of the US Federal government services due to a political deadlock over the 'Obamacare' plan in the budget and with Italy likely to face new elections.
Domestically, the market expected a widened CAD for the April-June quarter that might put more pressure on the rupee and invite a ratings cut by international agencies.
The 30-share index of the Bombay Stock Exchange fell 1.8 per cent, or 347.50 points, to end at 19,379.77 on the last day of trade for September.
The broader 50-share Nifty closed 1.7 per cent, or 97.90 points, lower at 5,735.30.
The rate hike from the central bank on September 20 cut short what had been a rally in domestic shares, although the Sensex still managed to gain 4.1 per cent in September, its biggest monthly advance since November 2012.
Sector-wise, bank, capital goods, metal, automobile and oil and gas scrips tanked. However, information technology (IT) stocks gained.
The bank index plunged 320.07 points, capital goods index was down 231.96 points, followed by metal index (-209.44 points), automobile index (-165.11 points) and oil and gas index (-145.78 points).
Healthy buying was observed in IT index which rose 4.37 points.