The domestic markets remained under pressure due to rising US bond yields and a stronger greenback, said Vinod Nair, Head of Research at Geojit Financial Services.
While Sensex reported a loss of 796 points, or 1.18 per cent, to settle at 66,800, Nifty closed at 19,901, down 232 points or 1.15 per cent.
Concerns reigned over the upcoming Fed policy, interest rate trajectory and rising oil prices. Bank Nifty underperformed on Wednesday due to rising cost of funds and reduction in deposits leading to moderation in net yields, Nair said.
Most of the sectoral indices were in the red while Nifty Metal and Nifty Bank were the top losers, down by 1.53 per cent and 1.17 per cent, respectively, said Vaibhav Vidwani, Research Analyst at Bonanza Portfolio.
Increased US bond rates, weaker rupee, rise in crude oil prices, selling by FIIs, and the results of the HDFC Bank analysts' meeting -- all contributed to Wednesday's market gloom, he said.
HDFC Bank, down by 4 per cent, contributes 14 per cent in Nifty 50. Due to the combined impact of an increased cash reserve ratio and surplus liquidity, HDFC Bank anticipates that the net interest margin would decrease and perhaps fall by 25 basis points, which supported the negative sentiment of the market.
Power Grid Corporation, Coal India, ONGC, Sun Pharma and Eicher Motors were among the top gainers, while the top losers were HDFC Bank, JSW Steel, Reliance Industries, BPCL and SBI Life Insurance, Vidwani said.