India's key share market index plunged nearly two percent Thursday, a day after it touched an all-time high, because of the terror attacks that tore through London's underground railway network.

The stock market barometer 30-share Bombay Stock Exchange sensitive index or Sensex closed at 7,145.13, a loss of 142.47 points or 1.95 percent from its previous session's close.

The market benchmark had touched an all-time closing high of 7,287.60 Wednesday on large-scale across the board institutional buying.

India's blue-chip equities have soared sharply higher in the last couple of weeks on hopes that a normal monsoon would boost economic growth in the current fiscal in Asia's fourth largest economy.

Dealers said the stock market opened for the day Thursday on a shaky note as institutional investors adopted a cautious approach after the hectic buying activity of the past few days.

The market sentiment was also dampened by a sharp jump in global crude oil prices. India imports nearly 70 percent of its energy requirements and an increase in global prices might adversely affect the country's economy.

The sell-off intensified in the second half of the trading session as soon as news of the London bomb blasts entered the trading ring.

A string of terror attacks in the British capital's underground rail network and a bus killed at least 45 people and injured nearly 1,000, crippling London and leaving thousands stranded on the streets.

"The attacks brought back memories of 9/11 in the minds of investors," said an analyst with a domestic brokerage firm.

"The last few weeks' rally was mainly driven by high liquidity. After this incident, the inflow of overseas fund investments will surely see a decline. Investors will take their hands out of equity markets globally."

In the old economy sector, shares of Reliance Industries, a leading oil refiner and petrochemicals maker, lost 4.5 percent to touch Rs.616 and state-run energy major Oil and Natural Gas Corp closed with a loss of 4.7 percent at Rs.928.10.

Shares of automobile companies like the largest carmaker Maruti Udyog fell 2.5 percent to Rs.448 and two-and-three wheeler major Bajaj Auto ended 1.2 percent lower at Rs.1,343.

In the technology sector, shares of Hyderabad-based Satyam Computer declined two percent at Rs.491 and Infosys Technologies, the country's second largest software exporter, was down 1.3 percent at Rs.2,315.