Indian equity market tumbled 2% in a holiday-shortened week as investors turned cautious ahead of the 2023-24 federal budget due on February 1 and the Federal Reserve meeting, which will announce the results on the same day.

For the week, the BSE Sensex shed 1,290.87 points, or 2.12%, to end at 59,330.9 and the Nifty shed 423.3 points, or 2.34%, to end at 17,604.35. However, the small- and mid-cap index fell even more.

For the week, the BSE smallcap, midcap, and largecap indices fell 3.5%, 2.6% and 3%, respectively.

The BSE smallcap index fell 3.5%. Kiri Industries, GTL Infrastructure, Dixon Technologies, PC Jeweler, Monarch Networth Capital, Power Mech Projects, Jayant Agro-Organics and KBC Global fell 15-26%.

However, Manaksia, Kabra Extrusion Technik, SVP Global Textiles, Bliss GVS Pharma, Sandur Manganese and Iron Ores, Control Print and Shalimar Paints rose 9-17%.

The Nifty PSU Banks Index fell 9.6%, the Nifty Energy Index fell 7.5%, the Oil and Gas Index fell 7.4%, and the Metals Index fell 6%. However, the Nifty auto index rose by 3%.

Funds are being diverted to other emerging markets, with foreign institutional investors selling as valuations are attractive.

Foreign Institutional Investors (FIIs) continued their stock-selling spree this week, selling shares worth Rs 9,352.18 crore. Support was provided by Domestic Institutional Investors (DII), who bought shares worth Rs 7,210.53 crore.

In January, FIIs sold shares worth Rs 29,232.29 crore, and DIIs bought shares worth Rs 23,392.91 crore. The Federal Reserve was expected to raise rates by 50 basis points; any rate cut below that level would be positive.