New Delhi - India equities fell sharply for the third day on Thursday as the benchmark Sensex shed 5.3 per cent in early trade tracking the deepening global financial crisis after the collapse of the US investment bank Lehman Brothers.

The 30-share-sensitive index, which has lost 1,685 points in the last seven trading sessions, plunged 704.76 points to fall to below 13,000 soon after opening.

The index touched a low of 12,558.14 points, a loss of 5.31 per cent, on heavy selling by funds and investors. It later recovered and was trading at 12,790.10 points, a loss of 
3.56 per cent at 11:50 local time (0620 GMT).

Similarly, the broader S&P CNX Nifty of the National Stock Exchange was trading at 3,873.35 points, a loss of 3.37 per cent around the same time.

It had earlier touched the day's low of 3,799.55, 208.70 points down from its previous closing mark on Wednesday.

Realty, metal, capital goods and pharma stocks declined sharply. ICICI Bank, Jaiprakash Associates, Reliance Communication, Tata Steel, and Sterlite touched a 
52-week low.

Other losers included Infosys, Bharti Airtel, Reliance Industries and Ranbaxy Labs.

The shares of Ranbaxy Labs, India's largest drugmaker continued to fall after the US banned the sale of 30 generic medicines citing manufacturing deficiencies.

Meanwhile, the PTI news agency reported that Ranbaxy hired former New York mayor Rudolph Giuliani as an advisor after the US blocked imports of its drugs made in two India-based manufacturing units.

Market analysts said concerns that more companies could succumb to the global financial turmoil - that has already claimed Lehman Brothers and Merrill Lynch - had caused tremendous weakness in bourses across Asia. (dpa)