Mumbai, Aug 8 (IANS): Indian equities plunged in early trade Monday, sending a key index falling nearly 550 points, or 3.15 percent, after a weekend downgrade of the world's largest economy and warning of a further cut if the US fiscal debt did not improve.

A benchmark index for the Bombay Stock Exchange (BSE) opened Monday at 16,907.57 points, against the previous close at 17,305.87 points, and fell further to 16,759.45 points.

About an hour into trading, the 30-share benchmark index was ruling at 16,786.95 points, with a loss of 518.92 points, or 3.00 percent. The losses were so widespread each of the 13 sector-specific indices were in the red, so was the case with the 30 Sensex stocks.

At the National Stock Exchange (NSE), the broader 50-share S&P CNX Nifty was also down, ruling at 5,063.45 points, with a loss of 147.80 points, or 2.84 percent.

The stocks of Wipro were down as much as 7.23 percent on the BSE, those of DLF were down 6.66 percent, Tata Motors (6.35 percent), Tata Steel (5.23 percent), Tata Consultancy (5.03 percent), Infosys (4.65 percent) and Bharti Airtel (4.13 percent).

"Needless to say, the markets could remain weak in the short term and will move in line with global markets and fund-flows, which could be negative for all emerging markets," said Dipen Shah, senior vice president, private client group research, Kotak Securities.

"The immediate trigger for the markets could be the US Federal Reserve meeting on Tuesday. It will be watched very carefully to get any message on what does Fed think about further stimulus," Shah added.

"Markets are expecting some comments about further stimulus looking at the recent spate of weak economic data from that country."

The downfall followed top credit rating agency Standard and Poor's downgrading the US sovereign debt rating last Friday and cautioning of a further downgrade if the fiscal position of the country did not improve.

Other Asian markets too lost heavily despite efforts by policymakers around the world to restore investor confidence. Japanese Nikkei was down 2.07 percent, the Chinese Shanghai Composite was 3.68 percent lower and Hong Kong's Hang Seng fell 4.29 percent.

Saturday had seen Finance Minister Pranab Mukherjee trying to assuage investor sentiments.

"Our (Indian) growth story is intact and our fundamentals are strong. The markets have shown that they can withstand external pressures," Mukherjee told a event hosted by the Confederation of Indian Industry (CII).

His comments had followed the 30-scrip Sensex 700 points in intra-day trading after a ratings downgrade of the US economy by S&P for the first time in its history. The notch AAA credit rating was scaled down to AA+.