The trigger for the sharp fall in the US markets, which led to a drop in other markets was the sharp rise in bond yields in the US.
There were also fears that the US Fed maybe going too fast on interest rate hikes.
The 10-year treasury yields in the US was at 3.16 percent, down from the seven-year high of 3.26. When yields rise, investors tend to dump stocks in favour of the safe treasuries.
US President, Donald Trump said the stocks decline in the US was "a correction that we've been waiting for for a long time."
Back home, Banks and NBFC stocks, which saw a stellar rally on Wednesday, shed most gains on account of the massive plunge in global markets. ICICI Bank, Axis Bank and SBI, which saw massive gains on Wednesday, were big losers on Friday.
In fact, Axis Bank was the top loser from the Nifty Sensex space and dropped, as much as 5 per cent. The only gainer from the index was ONGC.
Even NBFC stocks like Bajaj Finance, DHFL etc., saw huge cuts in trade. All of the recovery of 159 points seen in the Nifty on Wednesday, was lost due to the global rout on Thursday.
TCS was down 2.8 per cent, ahead of its results to be declared later today.
The rupee opened lower against the dollar, as was largely expected. Foreign Portfolio Investors have been selling massive amounts in the Indian markets in the last few months. This capital outflows has been adding to pressure on the rupee.
The currency was last seen trading at 74.30 to the dollar, as against the previous days close of 74.21. It had gained on Wednesday, on reports of some tweaking of norms for NRIs.
Asian markets saw a dramatic fall, with the Japanese Nikkei down 1,000 points or 4.25 per cent. The Hang Sang was down 3.58 per cent, while the Shanghai Composite was down in excess of 3 per cent on Thursday.
Compared to these markets, the damage done to Indian stocks was far less, given that crude prices dropped.
It was carnage across global markets, led by a sharp drop in the Dow Jones Industrial Average which slumped 831 points, while the tech heavy NASDAQ fell 4 per cent on Wednesday.
This dragged stocks from Europe to Asia lower. The Sensex ended the day down 760 points at 34,001 points in trade on Thursday, while the Nifty ended lower by 225 points in trade. Markets like the US saw one of the biggest one day losses since Feb, 2018.