Indian equities fell sharply on Wednesday after the International Monetary Fund (IMF) revised down the global growth forecast fuelling fears of a global slowdown. Investors were also cautious ahead of the polls which are set to begin from Thursday.
Caution was also seen among investors ahead of the start of the earnings season and for fresh trade tensions between the US and the EU.
The BSE Sensex closed 345.20 points or 0.89 percent lower at 38,594.02. The broader Nifty slipped by 84 points or 0.72 percent to finish at 11,587.95.
"Market slid ahead of the start of the first phase of polling and renewed concern on global economic growth after IMF downgraded the growth forecast to 3.3 percent for 2019. Rupee remains strong and FIIs inflow was steady which will cap the downside," said Vinod Nair, Head of Research, Geojit Financial Services.
The election-led consolidation may be short-lived and the key trigger will be the earnings growth which is expected to start to revive from the fourth quarter onwards, he added.
According to Sameet Chavan, Chief Analyst-Technical and Derivatives, Angel Broking, the correction was "led by heavyweights like HDFC Twins, Reliance and marquee IT names".
Hindalco Industries was among the top losers on the NSE as the company temporarily shut the operations of its alumina plant in Jharkhand after a spillage incident injured four people.
Asian Paints, the largest paint maker lost nearly 2.5 percent after a downgrade by CLSA over rising crude oil prices. Bharti Airtel lost the most on Wednesday on the NSE.
Wipro gained more than 2 percent after market regulator SEBI approved a buyback worth Rs 12,000 crore, the company's largest till date. Tata Motors ended as the top gainer.
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