Key benchmark equity market indices on Tuesday fell over 1% on account of selling pressure from Foreign Portfolio Investors (FPIs) and local traders. The sell-off was broad-based and small cap and mid cap stocks bore the maximum brunt, analysts said. 

The S&P BSE Sensex fell 930.55 points or 1.15% to 80,220.72 points led by auto, banking and metal stocks.

The Sensex stocks which lost the most included M&M down 3.79%, Tata Steel (2.94%), Power Grid (2.48%), State Bank (2.91%), Tata Motors (2.64%) and IndusInd Bank (2.58%).

The BSE mid-cap index was down 2.52% and the BSE small-cap was down 3.81%. 

The NSE Nifty-50 index too fell 309 points or 1.25% to 24,472.10 points. 

Deepak Jasani, Head of Retail Research, DFC Securities said, “ The Nifty ended at the lowest level in over two months on October 22 suffering under selling pressure from FPIs and local traders.” 

“Markets witnessed higher volumes on a down day even as investors disappointed with underwhelming Q2 numbers sold stocks regardless of prices to protect whatever profits are left on the table for them. Mid and Smallcap indices came under severe selling pressure falling between 2.5 to 3.8%,” he said. 

“Global cues were also negative as investors evaluated third-quarter corporate earnings amid uncertainty regarding global economic growth and interest rate trajectories; however, the extent of weakness in the Indian markets was exceptional,” he added.

Vinod Nair, Head of Research, Geojit Financial Services said, “Bearish sentiment continued to dominate the domestic market amid heightened volatility, with small and midcap stocks taking the biggest hit.” 

“The recent sharp rise in U.S. bond yields signals diminished expectations for aggressive rate cuts by the US Fed, also affecting fund flows to EMs. In the short term, this bearish outlook may persist due to sluggish earnings growth trends,” he said.

“However, the RBI’s latest bulletin upholds India’s GDP growth forecast of 7.2% for FY25, suggesting that the Q2 slowdown is temporary, with festive season consumption expected to rebound and ease the pressure on earnings downgrades,” he added.