The 30-share BSE index fell 1,159 points or 1.89 per cent to close at 59,985; while the broader NSE Nifty settled 354 points or 1.94 per cent lower at 17,857.
This was its biggest drop since April 12 this year, when it had plunged 1,708 points.
Top losers in the sensex pack included ITC, ICICI Bank, Kotak Bank, Axis Bank and Titan with their shares falling as much as 5.54 per cent.
While IndusInd Bank, L&T, Ultra Cemco and Asian Paints were the major gainers rising up to 2.94 per cent.
On the NSE platform, all sub-indices finished in red with PSU Bank falling up to 5.22 per cent. The NSE Realty index fell 3.77 per cent, metal plunged 3.44 per cent and the NSE Bank index plunged 3.34 per cent.
Investors lost Rs 4.82 lakh crore, with the market capitalisation of all BSE-listed companies standing at Rs 2,60,48,949.80 crore.
Here are the key factors that dragged markets lower:
* Metal, bank, realty stocks led losses
All sectoral indices finished in losses amid heavy sell offs by investors.
Banking, metal and realty stocks suffered the maximum losses. While, PSU Banks were the major losers falling nearly 5 per cent, the financial services index also fell over 2.5 per cent.
“There is some exuberance in terms of valuations in certain pockets of the market. In some pockets, there is still money to be made, which will see some sectoral churn,” Saurabh Jain, assistant vice president at SMC Securities told news agency Reuters.
Among the bank stocks, Punjab National Bank (PNB) declined nearly 11 per cent after the company reported a fall in income for the second quarter ended on September 30.
* Copper, aluminium prices bring metal index down
Copper and aluminium prices hit multi-month lows on easing supply concerns, pulling down the Nifty metals index by 3.4 per cent.
“Chip shortage and supply chain issues are impacting the manufacturing sector, which has led to lower demand for metals. Also, there is a slowdown in Chinese real estate markets. Both of these macro factors are weighing on metal stocks,” Jain added.
* Adani Ports plunged
Adani Ports slumped nearly 11 per cent after saying it would exit its Myanmar investment.
The firm is abandoning its plans to build a container terminal in Myanmar, weeks after applying for a US licence for the project, saying it believed it did not violate sanctions.
* Subdued global cues
Asian stocks fell amid concerns that the recovery from the pandemic will slow as elevated inflation forces tighter monetary policy.
Ongoing worries about China’s vast property sector and the future of giant developer Evergrande were also in view ahead of a payment deadline, while uncertainty over Joe Biden’s social spending plan was also keeping a lid on sentiment.
Stock exchanges in the US also ended on a negative note in the overnight session.
US Treasury yields fell to a two-week low as traders weighed continued positive corporate results and a resurgence in US-China tensions that could compound supply-chain worries.
“Equity benchmarks made a negative start on Thursday tracking weakness in global peers. Markets quickly extended their losses and are now trading lower, with each market losing more than half a per cent in early trade,” senior research analyst at CapitalVia Global Research Likhita Chepa told news agency IANS.
* Morgan Stanley downgraded Indian equities
Morgan Stanley downgraded Indian equities to equal-weight from overweight on Thursday due to expensive valuations, and said it expects the market to consolidate ahead of potential “short-term headwinds”.
The downgrade follows similar moves by Nomura and UBS over expensive valuations.
Indian stocks have strongly outperformed other emerging markets this year, with the MSCI India index up 27.53 per cent, compared to a 0.65 per cent slip in the MSCI Emerging Market index.
* F&O expiry
Both the BSE and NSE indices cracked ahead of the monthly derivative expiry for the month of October.
(With inputs from agencies)
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