The Indian stock markets collapsed with Sensex falling 769 points on fears that rising inflation in the US will curb spending and limit further interest-rate cuts, thus slowing investment into emerging markets.

The BSE index fells down by 769.48 points to 19,261.35. It touched the day's high of 20,032.67 and low of 19,177.19 points.

While, the National Stock Exchange index, Nifty, slipped by 270.70 points to 5,777, after touching the day's high of 6,039.95 and low of 5,740.60 points. BSE Midcap Index shed 3.87 per cent and Smallcap Index was down 2.91 per cent.

The sector that registered the biggest loss was the BSE Metal Index, which was down by 7.28% followed by capital goods index by 733.37 points at 19,129.14.

DLF (down 7.53%), NTPC (7.3%), (5.81%), Tata Steel (6.15%) and Tata Motors (5.8%) were the biggest index losers.

The major index fallers : BSE power index fell 4.80%, BSE realty index fell 5.65%, BSE power index fell 4.80, BSE auto index fell 3.04%, BSE cap good index fell 3.69%, BSE IT index fell 2.16% and BSE oil & gas index fell down 5.13%

Among the NSE-50 scrips Idea Cellular, Sterlite Industries, SAIL, Nalco, Suzlon and Reliance Petroleum were some of the key draggers; they slipped into red by over 6.1 per cent each.

DD Sharma, Senior Vice President of Anand Rathi Securities said, “A negative opening was expected given the weakness in US and Asian markets, but we did not expect such a drastic fall. With 5800 on Nifty broken, the short-term trend has now turned negative. If global markets are positive Tuesday, we could see a bounce back. If not, the selling will continue.”

On the other hand, Jim Awad, Chairman of WP Stewart Asset Management said, "You can see a significant short-term correction in overseas market as a result of what happens in the US, but this does not change the secular growth story that you have in China, India and Asia, I think any correction there would be a buying opportunity."