By Vivek Kumar M and Bharath Rajeswaran
(Reuters) -Indian shares fell on Wednesday as U.S. tariff fears and domestic earnings worries continued to spook investors and pushed the smallcaps into bear market territory.
The Nifty 50 and Sensex fell about 1% each as of 10:30 a.m. IST, led by declines in Reliance Industries, the second most weighted stock on benchmarks. The stock shed 3% amid a broader sell-off.
Forty-three of the Nifty 50’s constituents declined.
The Nifty, which has lost about 4% since February 5, now stands 13% below the record high hit on September 27, 2024.
On the day, all the 13 major sectors logged losses.
Markets are seeing a “significant and widespread sell-off, with a sustained negative performance creating a challenging environment for investors”, said Sameet Chavan, head of research at Angel One.
Concerns over global trade after U.S. President Donald Trump said on Sunday he would impose reciprocal tariffs on several nations continue to rattle Indian markets.
The broader smallcaps and midcaps tumbled 3% and 2.5%, respectively, to their lowest since early June 2024.
The smallcap index slipped into the bear market territory, a 20% drop from the record high hit in December 2024. Midcaps are just shy of slipping into a bear grip, down about 18.6% from all-time highs.
The carnage in small- and midcaps is due to concerns that systematic investment plans (SIPs) in the segments are being discontinued by some investors, two analysts said.
“Some funds are caught on the wrong foot, with valuations of the stocks they are holding in mid- and smallcap segments way above earnings growth,” said Deven Choksey, managing director at DRChoksey FinServ.
The possibility of some smallcap funds winding down has also intensified the sell-off, Choksey added.
Investors now await India’s inflation data due after market close. Consumer inflation is expected to have fallen sharply to a five-month low of 4.6% in January on slowing food price rises, according to economists polled by Reuters.
(Reporting by Vivek Kumar M and Bharath Rajeswaran in Bengaluru; Editing by Sonia Cheema and Sumana Nandy)
