Benchmark stock indices in India are tracking a sharp slump in global equities with an across-the-board sell off as Fitch Ratings’ downgrade of the US sovereign credit grade seems to have evoked a risk off sentiment.

The barometer for India’s stock market performance – Nifty50 and Sensex – both are sharply down by over a percent, with Nifty50 slipping well below the 19,500 level after a weak start. At 1.24 pm, the key indices were at their lowest for the day, with he Sensex was down 784.89 points or 1.18 percent at 65,674.42, and the Nifty was down 240.10 points or 1.22 percent at 19,493.40.

The sharp fall in the market pushed the Sensex and Nifty50 to their lowest levels in over three weeks.

“The recent downgrade of the US rating by Fitch may have a minor impact on the Indian market, but it is unlikely to be a major concern since rating changes often come with certain repercussions. Nevertheless, it could provide an opportunity for some investors to take profits, leading to a possible pullback in the market,” Santosh Meena, head of research, Swastika Investmart.

“Signs of exhaustion are evident at higher market levels, following a strong rally from the lows in March. Foreign institutional investors (FIIs) have turned net sellers in the past few days, indicating a cautious stance in the market. If the Nifty index begins to trade below its 20-day moving average around 19,600, it might experience further declines toward 19,300 and 18,888 levels,” Meena said.

The selloff is being led by banking shares and heavyweight Reliance Industries, while consumption names like HUL, Asian Paints and Nestle are bucking the trend.

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This weakness stems from a steep selling across Asian markets, where benchmark indices like Japan’s Nikkei 225, South Korea’s Kospi and Hong Kong’s Hang Seng settled with sharp cuts of around 2 percent or more. “Think it’s just a catalyst for Asia traders to book profits,” Joshua Crabb, head of Asia Pacific equities at Robeco Hong Kong told Bloomberg.

Following the trend, European markets like those of Germany, France and the UK also opened sharply lower, down around a percent each. The weak start of the European markets also intensified the fall in the Indian equity market.

Among specific stocks, Hero MotoCorp is witnessing intense selling pressure, following the visit by Enforcement Directorate (ED) officials at the residence of chairman of Hero MotoCorp Pawan Munjal in connection with a case involving the Directorate of Revenue Intelligence (DRI). Other losers include NTPC, Tata Motors and Tata Consumer Products, down around 2 percent each as investors booked profits in these counters.

Also Read | Fitch downgrades US credit rating to AA+: All you need to know

Weakness in the market is broad-based, with all sectors, including automobiles, banks, FMCG, energy, information technology, metals and pharma struggling with deep losses. The broader market is moving in tandem, with Nifty Midcap 100 and Nifty Smallcap 100 indices both down around 1 percent.

Fitch Ratings had downgraded the US credit rating from AAA to AA+, citing ‘expected fiscal deterioration over the next three years’. The Move triggered a spike in US yields on the benchmark 10-year bond to over 4 percent. US Treasury Secretary Janet Yellen was quick to respond to the downgrade, calling it “arbitrary” and “outdated.”

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