Indian shares hit a three-week low on Wednesday, dragged by losses in banks and financial companies, as worries over higher interest rates and their subsequent impact on growth continued to dent investor sentiment globally.
The Nifty 50 fell 0.5% to 19,558 points, their lowest since Sept. 7 as of 10:04 a.m. IST, while the S&P BSE Sensex was down 0.6% to 65,557 points.
Both benchmarks are down about 3% after hitting all-time highs earlier this month.
The U.S. Federal Reserve's hawkish tone weakened risk appetite, with Wall Street's main indexes ending more than 1% lower on Tuesday on the back of surging Treasury yields.
Heavyweight bank and financials indexes were top laggards, falling 0.9%, each.
HDFC Bank was among the top drags in the Nifty 50, falling 1.3%. The stock has fallen more than 2.5% since giving a weak outlook last week. The pharma index rose 1.22%.
"With foreign investors selling in local markets showing no signs of stopping, a subdued trend with a negative bias will persist," said Shrikant Chouhan, head of research (Retail), Kotak Securities.
Foreign institutional investors (FIIS) remained net sellers this month, offloading equities worth about $1.5 billion in September so far after being net buyers for the past six months.
Buying from domestic institutions, however, has helped cushion the FII selling impact, analysts said.
"Presently, the benchmark indices are technically showing limited-range movement. Nevertheless, trading activity is expected to be massive on either side at some point," Chouhan said.
Among the more domestically focused stocks, small-caps were up 0.4% and mid-caps rose 0.2%.
Among individual stocks, Vedanta shares fell 5% after Moody's downgraded unsecured bonds of the mining conglomerate's parent, while Borosil Renewables rose 6% after an Indian court quashed an income tax demand notice. (Reporting by Sethuraman NR in Bengaluru; Editing by Sohini Goswami and Janane Venkatraman)