The Dow tanked over 1,000 points in overnight trade.
Heavy selling pressure in banking, auto, oil and gas, capital goods and IT stocks were witnessed. The S&P BSE Sensex ended at 34,413, up almost 330 points while the broader Nifty50 index settled at 10,576, up around 100 points. About 1,400 shares advanced against 1,358 declining shares on the BSE.
The Shanghai Composite index too fell 4.23% at 3,123.95 and the Singapore-based SGX Nifty index was at 10,420.00 points, down 1.34%.
The broader markets, however, outperformed frontline indices. "The PE (price to equity) ratio is getting re-rated, but there is unlikely to be any cut in earnings estimates going ahead", said Vinod Nair, head of research at Geojit Financial Services.
MSCI's broadest index of Asia-Pacific outside Japan was little changed as US bond yields crept up towards four-year highs.
So far in February, FIIs have pulled out Rs 3,838 crore from India's equity markets, while investing Rs 4,572 crore in debt, according to data from depositories.
For MSCI's broadest index of world shares, the 47-country ACWI the slump was 6.2 percent, which as long as it is still more than 6.1 percent when U.S. markets close later will be the biggest loss since September 2011. The Nikkei index fell 2.32 percent, or 508.24 points, to close at 21,382.62. The S&P gained over 500 points to 34634 levels before trimming gains.