Shares fell on Monday, led by losses in information technology and realty stocks, taking cues from U.S. Federal Reserve signalling aggressive rate hikes.
Fed Chair Jerome Powell's promise of policy "pain" to contain inflation quashed hopes that the central bank would soften its rate hike stance to prevent an economic slowdown.
Nifty was down 1.4% at around 17,310, in early trade, while Sensex dropped 1.42% at 58,000.
Rate sensitive realty index was down 1.4%, while the IT index slumped 3.5%.
The Indian rupee opened at a record low against the dollar, which further strained sentiment.
Powell's speech comes at a time foreign investors were returning to Indian stocks after dumping them in the first half, as they look for higher returns amid expectations that major central banks will slow their rate hike cycle.
"The Fed (stance) has spooked the markets," said AK Prabhakar, head of research at IDBI Capital.
"An aggressive rate (hike) will slow down foreign buying," Prabhakar said, adding, "But, investors are not happy with the political decisions in China, which will likely benefit India as funds don't have any alternative to invest."
"The Indian market is more resilient and (I) don't see a major correction."
Shares of fertiliser companies fell between 2% and 5% on Monday following a government announcement mandating companies availing subsidy, to market their products under a single brand.
Investors were awaiting updates from the annual general meeting of India's most valuable company and oil to telecom conglomerate Reliance Industries due later in the day. Reliance shares were mostly unchanged on Monday morning.
