In the broader market, the BSE Midcap was up 0.8 per cent, while the BSE Smallcap rallied over 2 per cent. The BSE banking index was trading 0.09 per cent down at 29,169.66 points.
At their lowest points, the two main indices of the Indian equity market - S&P BSE Sensex and NSE Nifty50 - plunged by around 3.30 per cent each. The Sensex surged a 1,000 points from 35,000 to past 36,000 points in eight sessions in mid-January, only to lose it all in just three sessions in early February. "I think rather than the equity market, we will look to the bond market for signs that the equity correction has bottomed out", he said. "The fear of inflation firming up, and hardening bond yields led to increase in US VIX and send the US market spiralling down, with momentum strategies adding to the domino effect", said Ritesh Jain, chief investment officer at BNP Paribas Mutual Fund.
Interestingly, the market breadth was strong as numerous mid-cap and small-cap stocks gained ground after the recent sell-off. Tata Steel ended with a marginal gain of 0.06 per cent. The Nifty at one stage touched a low of 10,276.30 and a high of 10,594.15. "However, towards close, market recouped some losses led by value buying on account of earnings growth expectations", said Nair.
The Japanese Nikkei was down with a drop of more than 4.73 percent, while the Korean Kospi dived 1.54 percent while the Hong Kong's Hang Sang was down 5 per cent with a more than 1,000 points fall. Frankfurt's DAX fell 1.97 per cent, Paris CAC lost 1.75 per cent and London's FTSE shed 1.73 per cent.
A massive downturn in the U.S. and East Asian stock markets unleashed a selling frenzy in the Indian equity markets during the morning trade session on Tuesday. Investor sentiment has remained sluggish after the government announced in the Budget a proposal to levy 10 per cent long-term capital gains (LTCG) tax on equities and projected a fiscal deficit of 3.5 per cent of GDP for 2017-18. The RBI kept the key policy rate unchanged at 6 percent for the third consecutive time today in view of firming inflation.