BENGALURU: Indian shares fell to a more than one-month low on Wednesday on broad-based selling, as fears over higher interest rates for a longer period continued to hamper global equities.

The NSE Nifty 50 index settled 0.47% lower at 19,436.10, while the S&P BSE Sensex lost 0.44% to 65,226.04. Both benchmarks closed at levels that were the lowest since September 1.

Eleven of the 13 major sectoral indexes logged losses, with index heavyweight banks falling 0.98%. Public-sector banks and realty lost 2.83% and 1.73%, respectively.

The more domestically focussed small- and mid-caps underperformed the blue-chips, losing between 1.25% and 1.5%.

Auto, energy slide drags Indian shares; small-, mid-caps outperform

“The correction will continue in small- and mid-caps as the valuations are overheated after the recent rally,” said Avinash Gorakshakar, head of research at Profitmart Securities.

Small- and mid-caps have gained 30.05% and 27.1% in 2023 so far, outperforming a 7.35% rise in the Nifty 50.

Gorakshakar added that elevated bond yields in the U.S. could spur further foreign selling and trigger consolidation in Indian markets. Foreign portfolio investors (FPIs) snapped a six-month buying streak in September and have been net sellers for ten sessions in a row.

“Investors are pulling out some money from equities and reallocating to other assets like fixed income securities due to global uncertainty,” said Satish Ramanathan, chief investment officer - equity at JM Financial Mutual Fund.

Asian equities fell to an 11-month low after data showed an unexpected rise in job openings in the U.S. in August, heightening the possibility of a prolonged high interest rate regime.

Among individual stocks, private lender Axis Bank fell 4.37% and state-owned State Bank of India lost 2.77% on multiple block deals.

Maruti Suzuki lost 2.10% after the automaker received an income tax penalty notice for fiscal 2020 worth 21.60 billion rupees.