Stock markets in Shanghai and Shenzhen took a bearish turn Monday as new housing control policies pummeled investor confidence.

The benchmark Shanghai Composite Index finished at 2,273.40 after surrendering 86.10 points, or 3.65 percent, the biggest single-day drop since August 2011; while the Shenzhen Component Index shaved off 510.39 points, or 5.29 percent, to close at 9,139.75.

Both indices opened lower Monday and tracked downward throughout the day as investors reacted to the latest round of curbs aimed at the real estate market, including the soon-to-be-imposed 20 percent income tax on profits derived from second-hand home sales.

Losses in the heavily weighted property, construction and building material sectors were particularly acute as investors scrambled to sever their holdings of A-shares directly exposed to the country's real estate picture. Coal and financial stocks also crumbled, adding further pressure to the markets after a steep opening tumble.

Close to 50 listed developers fell by the 10-percent daily limit, including China Vanke Co and China Merchants Property Development Co, which ended a dismal trading day at 10.84 yuan ($1.74) and 25.36 yuan respectively.

Meanwhile, 11 listed cement manufacturers fell past the daily limit, including Anhui Conch Cement Co, which sagged to 17.88 yuan.

Financial shares didn't fare much better due to concerns about institutional investments in property. Anxin Trust & Investment Co lost 9.81 percent to 13.61 yuan. Everbright Securities Co declined 9.47 percent to 13.95 yuan.

The environmental protection sector proved to be one of the markets' few safe havens Monday. Sewage system operator Beijing Capital Co increased 9.98 percent to 6.72 yuan.