All-round selling pressure on the back of capital outflows from foreign funds pulled down the BSE benchmark Sensex by 458 points, as the market seemed concerned over a regulatory crackdown on companies and an ongoing probe into the 2G spectrum scam.
The Indian equity market has underperformed global peers after a series of scams were unearthed since mid-November.
Late last month, the investigating agency CBI unearthed a bribe-for-loan scandal involving officials from some state-run banks and two other financial firms.
Some investors preferred to book profit at the current stage as the market watchdog SEBI penalised four companies for colluding with stock brokers to rig their share prices.
In spite of a rise in the industrial output in October to double-digit (10.8 per cent) as against 4.4 per cent in the previous month, most of the indices finished with sharp losses.
Banking, realty, consumer durable, healthcare, auto and PSU counters were the major losers.
The 30-share Sensex lost 458 points, or 2.29 per cent, to end the week at 19,508.89 from its last weekend's level.
The S&P CNX Nifty also fell by 135.45 points, or 2.26 per cent, to 5,857.35. The BSE Mid-Cap index fell by 6.05 per cent and the BSE Small-Cap index tanked 9.21 per cent.
State Bank of India fell by 10.90 per cent after the top Government lender hiked deposit rates by 50-150 basis points for various maturities.
Foreign funds sold shares worth more than Rs 4,500 crore during the week, as per the provisional data from the stock exchanges.
Among the sectoral indices, Bankex fell sharply by 7.56 per cent, the BSE-Realty by 7.09 per cent, the BSE-Consumer Durable by 6.87 per cent, the BSE-PSU by 3.82 per cent and BSE-Healthcare lost 3.10 per cent.
India's second-largest listed telecom operator by sales Reliance Communications fell by 9.57 per cent.
India's largest real estate developer DLF tumbled by 7.58 per cent. Other losers were HDFC Bank (7.19 per cent), Reliance Infra (6.65 per cent), Cipla (6.11 per cent), ICICI Bank (5.45 per cent) and Tata Motors (5.08 per cent).
Wipro was the top Sensex gainer last week, rising 5.12 per cent after India's third-largest software exporter by sales won an outsourcing contract.
State-run NTPC was the second-biggest Sensex gainer, spurting 3.86 per cent.
State-run power equipment maker Bharat Heavy Elect rose 3.09 per cent and Jindal Steel & Power gained 2.35 per cent.
Index heavyweight Reliance Industries rose 1.72 per cent to Rs 1,023.70 on reports the company is set to increase crude imports from Latin America as it seeks better refining margins by processing heavier and cheaper grades of oil.
Total turnover of BSE and NSE dropped to Rs 19,737.90 crore and Rs 76,363.05 crore, respectively from the last weekend's level of Rs 21,751.23 crore and Rs 82,324.22 crore.