The US market saw its biggest sell-off in two years on Friday following a spike of Treasury yields
The markets fell for the fifth straight session, with the BSE Sensex shedding 309 points in line with a global sell-off.
The Sensex has dropped over 1,276.57 points since its began its descent before Union Budget on January 30.
The Sensex dropped 309.58 points, or 0.88%, at 34757.16 while NSE Nifty fell 94.05 points or 0.87% lower at 10666.65 as stocks sell fell globally.
The US market saw its biggest sell-off in two years on Friday following a spike of Treasury yields.
The midcap index has dropped more compared to benchmark indices. From January 23, when it started falling, the index has shed 8.40%, while the Sensex has dropped 3.54% from January 30.
Though the market has been on an upswing, crossing 36000 mark, the midcap index has been a laggard.
Imposition of the long-term capital gains tax on equities and fiscal deficit have been a worry for the market, which is also treading cautiously ahead of the Monetary Policy Committee meet this week, experts said.
"There are two types of correction that happens. One, where the market keeps on falling and another where the market goes on a roller-coaster ride. I think we are in the second part, where the market will keep on falling and rising till the end of March due to LTCG tax," Arun Kejriwal, founder, Kejriwal Research & Investment Service, said.
When asked about the monetary policy stance in its review this week, he said, "There is no way the RBI will cut rate this time. They may keep a tough stance due to rising crude oil price and sell-off in the global market."
Finance secretary, Hasmukh Adhia said in New Delhi that the "the sell-off in equity markets is due to a weak global sentiment and not beacause of LTCG tax announced in the Budget".
Commenting on the MPC meeting, Gautam Duggad, head of research, Motilal Oswal Financial Services, said, "We are not expecting any rate change from the monetary policy this time."
The big losers among the Sensex pack on Monday were HDFC Ltd, L&T, Kotak Bank, IndusInd Bank, Bajaj Auto, Adani Ports, ONGC, YES Bank, HDFC Bank, ICICI Bank, TCS, Wipro, Hindustan Unilever, M&M, Asian Paint, Tata Steel and Infosys, down by up to 4.06%.
Tata Motors, Power Grid, ITC Ltd, Coal India, Maruti Suzuki, Sun Pharma, Hero MotoCorp, NTPC, Dr Reddy's, RIL and SBI too rose.
Sector-wise, the BSE capital goods index declined the most, losing 2.65%, followed by bankex 1.11%, metal 0.56%, realty 0.36%, IT 0.29%, infrastructure 0.13% and consumer durables 0.11%.
While telecom, auto, power, PSU, FMCG and healthcare ended higher. Broader markets too followed benchmarks as the small-cap index fell 0.37% and mid-cap fell 0.09%.
In the Asian region, Japan's Nikkei down 2.55%, Hong Kong's Hang Seng fell 1.09%, while Shanghai Composite Index up 0.73%.
Key European indices such as Paris CAC 40 shed 1.06 % and Frankfurt's DAX lost 0.97%. London's FTSE eased 1.07%.
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