The market lost more than a percent on October 28. The broader markets - Nifty Midcap and Smallcap indices - also corrected a percent, but less than benchmark indices.
The BSE Sensex fell 599.64 points or 1.48 percent to close at 39,922.46, and the Nifty50 dropped 159.80 points or 1.34 percent to 11,729.60 .
"Indian market is expected to follow global cues with an increase in volatility in the coming days as we are heading closer to the US election and more economic restrictions due to the devastating rise of COVID cases," said Vinod Nair, Head of Research at Geojit Financial Services.
Here are four key factors that are weighing on the market:
Rising Coronavirus Infections
India continued to report better recovery rate and lowered active cases week-after-week, but the situtation in United States and some nations in Europe looks tense as the coronavirus infections, hospitalisation and deaths increased sharply again.
As a result, the governments announced further restriction measures to avoid the spread of virus, which ultimately could impact global growth.
Media reports indicated that France may announce complete lockdown to contain the virus outbreak. Mainland China also reported increase in virus infections.
US Presidential elections
Investors also looked cautious ahead of the US presidential elections scheduled to be held on November 3. Reports indicated that there could be tough competition between Republican Donald Trump and Democrat Joe Biden, and the surveys indicated that Democrats have more chance in the elections, over Republicans and the number of people to vote is expected to be more than previous several elections.
US President Donald Trump clearly stated that there won't be coronavirus relief bill before election, which has not yet cleared amid several negotiations between Republicans and Democrats.
Banks Led Losses
Banking & financials were leaders in fall as the Nifty Bank and Financial Service indices fell more than 2 percent each. The Bank Nifty formed bearish candle on the daily charts.
IndusInd Bank, Federal Bank, ICICI Bank, Kotak Mahindra Bank, SBI, HDFC Bank, Bandhan Bank Bank and Bank of Baroda were down 2-3 percent.
IT, Pharma and Metal indices were down 1-1.5 percent.
The Nifty50 corrected over a percent and formed large bearish candle on the daily charts, but overall trend of last few sessions indicated that the index has been in a range of 300-400 points and is expected to remain in same range in coming days too.
"We broke the levels of 11,700 and briefly visited 11,684 intraday which is around the lower end of the range but we bounced back to close above 11,700," Manish Hathiramani, Proprietary Index Trader and Technical Analyst at Deen Dayal Investments told Moneycontrol.
"These are crucial times for trading as a break of 11,650 could trigger a fresh wave of shorts which could take the markets down to 11,400-11,450," he said.