Domestic equity benchmark BSE Sensex dropped over 100 points in early trade on Wednesday as investor sentiment dampened further after the IMF cut India's growth outlook.
Massive foreign fund outflow too hit the market mood at the BSE, traders said.
After swinging nearly 250 point in a highly volatile opening session, the 30-share index was trading 104.13 points or 0.27 per cent lower at 37,878.61 by 9.30am on Wednesday; and the broader Nifty also fell 38.30 points or 0.34 per cent to 11,292.75.
In the previous session, the 30-share index ended 48.39 points, or 0.13 per cent, lower at 37,982.74. The Nifty too slipped 15.15 points, or 0.13 per cent, to close at 11,331.05.
In early trade, shares of Vedanta, IndusInd Bank, M&M, Maruti, Bajaj Auto, Bharti Airtel, ICICI Bank, Bajaj Finance, Tata Steel and RIL were among the top losers in the Sensex pack, falling up to 1.99 per cent.
On the other hand, HDFC Bank, Yes Bank, PowerGrid, TechM, HUL, SBI and HDFC Bank rose up to 1.69 per cent.
According to experts, the IMF's downward revision of India's economic outlook hit domestic investor sentiment.
The IMF on Tuesday projected a slower growth rate for India in 2019 and 2020, a downward revision of 0.3 per cent for both the years, saying its GDP will now grow at the rate of 7 and 7.2 per cent, respectively, reflecting a weaker-than-expected outlook for domestic demand.
"India's economy is set to grow at 7.0 per cent in 2019, picking up to 7.2 per cent in 2020. The downward revision of 0.3 percentage point for both years reflects a weaker-than-expected outlook for domestic demand," the International Monetary Fund (IMF) said in its World Economic Update.
Heavy foreign fund outflow and weak corporate earnings are also pushing the market lower, investors said.
On a net basis, foreign institutional investors sold equities worth Rs 2,607.97 crore, while domestic institutional investors purchased shares to the tune of Rs 2,625.10 crore, provisional data available with stock exchanges showed on Tuesday.
Elsewhere in Asia, Shanghai Composite Index, Hang Seng, Nikkei and Kospi were trading in the green in their respective early sessions. Equities on Wall Street too ended on a positive note on Monday.
Meanwhile, the Indian rupee depreciated 8 paise (intra-day) to 69.03 against the US dollar.
The global oil benchmark Brent crude futures were trading marginally higher at $63.98 per barrel.