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 per cent lower at 19,436.10, while the S&P BSE Sensex lost 0.44 per cent 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 per cent. Public-sector banks and realty lost 2.83 per cent and 1.73 per cent, respectively.

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

Also read: World’s biggest bond markets hit by relentless selling

"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 per cent and 27.1 per cent in 2023 so far, outperforming a 7.35 per cent rise in the Nifty 50.

Gorakshakar added that elevated bond yields in the US 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.

Also read: Rupee falls 3 paise to close at 83.23 against US dollar

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

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

Maruti Suzuki lost 2.10 per cent after the automaker received an income tax penalty notice for fiscal 2020 worth ₹2,160 crore.

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