Main gauge of the Tehran Stock Exchange shed more than 1,700 points to fall 0.7%.
The market entered negative territory during the later hours of the trading day after a large number of investors who had made big profits in earlier sessions joined the selloff.
Selloff particularly hit the shares of small companies, resulting share prices to plunge 2-3%, Financial Tribune reported.
TSE's main index TEDPIX lost 1,778.41 points on Tuesday to end trading at 251,278.4.
About 1.60 billion shares valued at 7.22 trillion rials ($58.06 million) changed hands for the day.
Trading at TSE and over-the-counter Iran Fara Bourse starts on Saturday and ends Wednesday.
Middle East Bank was the biggest winner as its shares went up 5.49% to 3,056 rials.
Mashhad Wheel Manufacturer Company incurred the biggest loss among all TSE-listed companies and went down 7.72% to 3,874 rials per share.
Mobarakeh Steel Company contributed the most to the benchmark's fall, followed by Golgohar Mining and Industrial Company, Khouzestan Steel Company, Chadormalu Mining and Industrial Company, and Tamin Petroleum and Petrochemcial Investment Company.
Bandar Abbas Oil Refining Company gave the biggest boost to the benchmark index, followed by National Iranian Copper Industries Company, Persian Gulf Petrochemical Industries Company and Tabriz Oil Refining Company.
The Price Index lost 482.75 points, or 0.70% to close at 68,215.5.
The First Market Index was down 1,365.56 points, or 0.73% to post 185,171.4. Second Market Index increased by 3,291.07 points, or 0.65% to reach 499,661.9.
The Industry Index went down by 1,578.83 points or 0.70% to register 225,586.2. Free Float Index was also down 2,126.04 points and hit 279,021.92.
TSE 30 went down 71.61 points to settle at 11,436.7 and the TSE 50 ended 57.16 points lower to finish at 10,249.7.
Iran Fara Bourse’s main index IFX lost 4.7 points or 0.14% to close Tuesday trade at 3,270.08.
About 820.36 million shares and securities valued at 5.83 trillion rials ($46.90 million) were traded at the over-the-counter exchange.