The Nifty 50 index settled 0.51% lower at a more-than five-week low of 19,365.25, while the S&P BSE Sensex fell 0.59% to an over six-week low of 65,151.02.
IT firms, which earn a significant share of their revenue from the U.S., dropped 0.49% on fears of further monetary policy tightening in the world’s largest economy after minutes of the Federal Reserve’s latest meeting showed members were divided on the need for more rate hikes.
Consumer stocks declined 0.89%, led by a 2.05% slide in ITC as analysts said the recent uptick in its share prices could limit rerating potential.
ITC, the top Nifty 50 loser, has gained 33.82% in 2023 so far compared with a 16.26% rise in the consumer goods index .
Financials slid 0.19%, extending losses for the sixth session in a row.
“Measures to mop up excess liquidity by the Reserve Bank of India could have a detrimental effect on earnings of financials and spur further consolidation,” said Mayuresh Joshi, head of equity research India at William O’Neil and Company.
Global equities declined, dragged by China economy concerns and US rate hike worries.
Midcaps and smallcaps rose 0.25% and 0.14%, respectively, outperforming the benchmarks.
“The small and midcaps are likely to do well despite global macro uncertainty due to their domestic focus and earnings visibility,” Joshi added.
Analysts said the prolonged high-interest rate regime in the U.S. could hurt foreign inflows into domestic equities.
Foreign inflows moderated in the first half of August to the lowest since the end of February.
Among individual stocks, Bata India surged 5.25% on report of partnership talks with athleisure maker Adidas.