The Indian equity benchmarks extended losses in noon deals with Sensex falling over 500 points and Nifty 50 index dropping below important psychological level of 21,950. The selloff was especially intense in mid-cap and small-cap shares as stress test results undertaken by mutual funds started coming in. The Sensex fell as much as 613 points and Nifty 50 index hit an intraday low of 21,931.

As of 12:35 pm, the Sensex was down 546 points at 72,550 and Nifty 50 index declined 195 points to 21,951.

Stress results posted by WhiteOak showed that its WhiteOak Midcap Fund, which has assets under management worth Rs 1,626 crore, will take 0.68 days to liquidate 50 per cent of the portfolio and 0.34 days to liquidate 25 per cent of the portfolio.

Stress test by Edelweiss Mid Cap Fund showed that it will take the fund house two days to liquidate 50 per cent of the portfolio and one day to liquidate 25 per cent of the portfolio. Likewise, Edelweiss Small Cap Fund, which has AUM of Rs 3,189.90 crore, will take three days to liquidate 50 per cent of the portfolio and two days to liquidate 25 per cent of the portfolio.

Meanwhile, selling pressure was broad-based as all the major sector gauges compiled by the National Stock Exchange were trading lower led by Nifty Oil & Gas index's over 4 per cent fall after government announced petrol and diesel price cut by Rs 2 per litre.

Banking, auto, financial services, information technology, media, metal, pharma, PSU bank and healthcare indices fell over 1 per cent each.

Mid- and small-cap shares were facing the heat of intense selling pressure amid stress test results. Nifty Midcap 100 index dropped 1.6 per cent and Nifty Smallcap 100 index fell 1.3 per cent.

Bharat Petroleum was top Nifty loser, the stock fell nearly 8 per cent to Rs 561.65 after government announced petrol and diesel price cut.

Coal India, ONGC, NTPC, Hero MotoCorp, Mahindra & Mahindra, Bajaj Auto, Power Grid, State Bank of India and Tata Motors also fell between 2-5 per cent.

On the flipside, UPL, ITC, Bharti Airtel, Bajaj Finance, HDFC Life and Britannia were among the notable gainers.

The overall market breadth was extremely negative as 2,497 shares were trading lower while 1,238 were advancing on the BSE.