The Indian equity benchmarks posted their worst single-day performance of 2023 on Wednesday on fears of further interest rate hike as sticky inflation persists amid tightening liquidity conditions globally and demand slowdown.
The Sensex fell as much as 991 points and Nifty 50 index dropped below its important psychological level of 17,600.
Volatility in global markets also added to selling pressure in domestic markets as geo-political concerns resurfaced after Russia backed out of key treaty with US that called for reduction of nuclear arms between the two countries.
The Sensex dropped 928 points to close at 59,745 and Nifty 50 index fell 272 points to settle at 17,554.
"It is a perfect storm for markets with rising interest rates, falling demand and expectation of tight liquidity conditions," market expert Avinnash Gorakksakar told Outlook Business.
"There is margin pressure for companies as raw material cost has gone up and clearly inflation is biting into companies' earnings. If interest rates go up further prices are likely to go higher," he says.
Selloff at Adani Group shares continued as all the 10 shares ended lower with most of them closing at their respective lower circuits. The decline continued despite efforts by Adani Group companies to assuage investors by prepaying loans and commercial papers.
Adani Enterprises fell as much as 12 per cent to hit an intraday low of Rs 1,381.
Adani Power fell 5 per cent, Adani Wilmar declined 5 per cent, Adani Green Energy dropped 5 per cent, Adani Total Gas tumbled 5 per cent, Adani Transmission fell 5 per cent, Adani Ports tumbled 5 per cent, ACC fell 4.3 per cent, Ambuja Cements fell 4 per cent and NDTV declined 5 per cent.
Meanwhile, all the 15 sector gauges compiled by the National Stock Exchange ended lower led by the Nifty Metal index's 2.6 per cent fall. Nifty Media, IT, Financial Services, Auto and Bank indices also fell between 1.5-2 per cent.
Mid- and small-cap shares also faced selling pressure as Nifty Midcap 100 and Nifty Smallcap 100 indices fell over 1 per cent each.
Reliance Industries, HDFC Bank, ICICI Bank, HDFC, Infosys and Bajaj Finance were among the biggest drags on the Sensex as they collectively wiped out over 400 points from the Sensex.
Adani Enterprises with cut of 11 per cent was top Nifty loser. Adani Ports, Grasim, Bajaj Finance, JSW Steel, Bajaj Finserv, Reliance Industries, Wipro, HDFC, HDFC Bank and ICICI Bank also fell between 2-7 per cent.
On the other hand, ITC and Bajaj Auto were among the notable gainers.
The overall market breadth was extremely negative as 2,525 shares closed lower while 949 ended higher on the BSE.
