Chinese shares plunged sharply on Friday, with the benchmark Shanghai Composite Index nosediving 7.4 percent, or 334.91 points, to finish at 4,192.87 points, in the sharpest daily drop since June 10, 2008.

The Shenzhen Component Index dived 8.24 percent, or 1293.66 points, to close at 14,398.79 points.

The ChiNext Index, tracking China's Nasdaq-style board of growth enterprises, tumbled a record 8.91 percent to end at 2,920.7 points.

Losers outnumbered winners by 927 to 19 in Shanghai, and by 1,375 to 34 in Shenzhen. More than 2,000 stocks fell by the daily limit of 10 percent.

Stocks relating to communications, the Internet, medical care, education and transportation were the biggest losers as concerns over market overvaluation mounted.

Total turnover on the two bourses came in 1.3 trillion yuan (213 billion U.S. dollars), retreating from Thursday's 1.6 trillion yuan.

Aviation manufacturing dived 9.66 percent, the road and bridge sector plummeted 9.6 percent and media plunged 7.06 percent.

Suzhou New District Hi-Tech Industrial and Iflytec plummeted by the daily limit of 10 percent to close at 11.93 yuan and 35.29 yuan, respectively.

Guosen Securities fell by 9.73 percent to 24.95 yuan. China Life Insurance Company Limited plunged 6.05 percent to 77.44 yuan.

Over the week, the Shanghai market lost 6.37 percent and the Shenzhen market dropped 8.72 percent.

Zhu Junchun, an analyst with Guosen Securities, attributed Friday's dive to concerns over liquidity and market overvaluation.

He said margin traders, who recently reduced or closed their positions on the market, also caused the plunge.

Zhu expects the stock market to continue its rise in the long run but said that market corrections in the short term are inevitable as share prices had surged too quickly previously.

The Chinese stock market has seen an impressive rebound since the second half of 2014 after being stuck in the doldrums for about six years.

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