Riding on the concerns over frothy valuations in mid and small-cap segments, and the SEBI chief’s remark over the SME stocks, the benchmark indices on Wednesday wiped off early gains and witnessed a broad-based sharp fall.

The Nifty 50 opened at 22,432.20 and fell 1.9 per cent to hit its intraday low of 21,905.65, and closed with a loss of 338 points, or 1.51 per cent, at 21,997.70 while the Sensex opened at 73,993.40 and fell 1.6 per cent to hit its intraday low of 72,515.71.

Sensex closed with a loss of 906 points, or 1.23 per cent at 72,761.89.

The major losses were suffered by the mid and smallcap indices. The BSE Midcap index cracked nearly 5 per cent while the BSE Smallcap index plunged over 5 per cent in intraday trade so far.

With this decline, the BSE m-cap has plummeted by Rs 20.69 trillion in three days.

On Nifty50, as many as 43 stocks ended in the red. Power Grid was down 7.07 per cent, Coal India by 7 per cent and Adani Enterprises by 6.81 per cent.

On the positive side, the top gainers were ITC up by 4.45 per cent, ICICI Bank by 0.66 per cent, Kotak Mahindra Bank by 0.53 per cent, Cipla by 0.38 per cent , and Bajaj Finance by 0.31 per cent . Conversely, the top losers in the Nifty index were Power Grid Corporation Of India (down 7.31 per cent), Coal India (down 7.18 per cent), Adani Ports & Special Economic Zone (down 7.05 per cent), Adani Enterprises (down 6.93 per cent), and NTPC (down 6.45 per cent).

The Bank Nifty ended at 47282.4, with an intraday high of 47468.7 and a low of 46842.15.

Barring Nifty FMCG, all other sectors nosedived in the sea of red. Nifty Media, Metal, and Realty indices were the worst hit as they declined over 5 per cent each.

The Nifty has experienced a breakdown from a rising channel on the daily chart, signaling the conclusion of the previous uptrend and the potential beginning of a downtrend.

The statement by SEBI Chairperson Madhabi Puri Buch indicating signs of manipulation in SME listings has played a major role in broad-based selloff.

Her statement comes at a time when the market regulator is investigating investment banks regarding inflated subscriptions in SME IPOs.

Further, the Association of Mutual Funds in India (AMFI), has asked asset management companies (AMCs) to put in place a policy to protect investors in small-cap and mid-cap segments in light of the froth building up in the broader markets.

It is to be highlighted that US inflation rose more than expected in February. This sparked worries over whether interest rate cuts by the US Federal Reserve may be delayed.

It resulted in a boost to the dollar index, and even the US stock market surged.

Domestic market seems to view this negatively because prolonged high-interest rates could deter foreign capital inflows into emerging markets like India, affecting them adversely.