The 30-share BSE index dived 536 points or 1.13 per cent to close at 46,874. Sensex lost 2,918 points in just five trading sessions.
Major laggards in the BSE pack include HUL, Maruti, HDFC Bank, PowerGrid, IndusInd Bank and HCL Tech with their shares sliding as much as 3.65 per cent.
The broader NSE Nifty moved 150 points or 1.07 per cent to close at 13,818.
Here are the six reasons behind the slide:
1) Investors turned cautious ahead of Budget
“The market has been on a downward trend during the last couple of days and that is not surprising because during the last two years, we have seen the fortnight preceding the Budget to be a cautious time,” Anand James, chief market strategist at Geojit Financial Services in Kochi, told news agency Reuters.
“This year, we have approached the Budget on a high and that is all the more reason for traders to take some money off the table,” he added.
2) Selloff in banking, IT and realty stocks
Massive selling pressure have been witnessed in banking, finance, IT and realty stocks. On the NSE platform, sub-indices Nifty IT, Realty and Bank stock fell as much as 2.20 per cent.
3) Foreign fund outflows
According to traders, recent foreign fund outflows from the domestic capital markets also had an impact on investor sentiment.
Foreign portfolio investors (FPIs) remained net sellers in the capital market as they offloaded shares worth Rs 1,688.22 crore on a net basis on Wednesday, according to provisional exchange data.
4) Weak global cues
US equities finished lower mainly due to lower earnings by tech giants and concerns over stretched valuation. Technology companies led a broad sell-off in stocks on Wednesday to mark worst trading day in nearly three months.
Facebook, Netflix and Google’s parent company led the pullback, which started early in the day as investors sized up the latest batch of company earnings reports.
Also, the US Federal Reserve raised concerns over US economic growth and left its key overnight interest rate near zero.
5) F&O expiry: Both the BSE and NSE indices cracked ahead of the monthly derivative expiry.
6) What’s next for markets
Some analysts also mentioned that the benchmark indices may extend fall. “We could slide further to test 13,600. If we are unable to hold that level, we could fall more towards 13,100-13,200. As of right now, any up move can be utilised to short the Nifty. The resistance on the upside is at 14,400-14,500,” Manish Hathiramani, technical analyst with Deen Dayal Investments, told IANS.
(With inputs from agencies)