Sensex fell as much as 701 points.

The S&P BSE Sensex and NSE Nifty 50 indexes along with rupee witnessed sharp declines in Monday's session mirroring losses in other Asian markets as an escalation of trade tensions between the United States and China spooked markets. The rupee depreciated past 70 per dollar mark after the yuan fell to its lowest levels in over a decade. The Sensex fell as much as 701 points and the NSE Nifty 50 Index briefly dropped below important psychological level of 11,800.

The Sensex ended 418 points or 1.1 per cent lower at 36,700 and the NSE Nifty 50 Index dropped 135 points or 1.2 per cent to close at 10,863.

The rupee declined by 99 paise or 1.4 per cent after the Chinese yuan broke below the psychological 7-per-dollar threshold after US President Donald Trump abruptly decided on Thursday to slap 10 per cent tariffs on the remaining $300 billion in Chinese imports.

Asian shares suffered their steepest daily drop in 10 months, with MSCI's broadest index of Asia-Pacific shares outside Japan sinking 2.5 per cent to depths not seen since late January.

"Combination of global issues like US-China trade tensions and political situation panning out in Kashmir is creating panic and keeping the markets nervous," Deven Choksey, MD of KR Choksey Investment Managers told NDTV over phone.

Article 370 of the Constitution, which grants special status to Jammu and Kashmir, has been removed, Home Minister Amit Shah said in parliament today, adding that President Ram Nath Kovind had signed an order that would come into force "at once". The announcement came after Prime Minister Narendra Modi held a meeting of his cabinet at his house this morning.

Jammu and Kashmir will also be "reorganised," said the Home Minister, with the state's bifurcation into two union territories, Jammu and Kashmir and Ladakh.

All the 11 sector gauges barring the Nifty Information Technology Index ended lower led by Nifty Media Index's 3.5 per cent decline.

Nifty Bank, Realty, Private Bank, PSU Bank and Metal sector gauges also fell between 1.6 and 2 per cent each.

Yes Bank was top loser in the Nifty 50 basket of shares, the stock fell 8.2 per cent to close at Rs 81.05. UPL, Tata Motors, Power Grid, Grasim Industries, GAIL, Reliance Industries, Zee Entertainment, Kotak Mahindra Bank, JSW Steel and State Bank of India were also among the losers, down between 2.8-6 per cent each.

On the flipside, Bharti Airtel, Tech Mahindra, Bajaj Auto, Tata Consultancy Services, Coal India, HDFC, IndusInd Bank and Cipla were among the notable gainers.

The overall market breadth was negative as 1,278 shares closed lower while a little over 500 shares ended higher on the NSE.

(With inputs from Reuters)