Benchmark indices Nifty and Sensex sank to nearly five-month lows, as a wave of concerns helped bears tighten their grip on the market. The slide marks the fifth consecutive losing session for both indices, driven by the latest inflation report that showed prices climbing to a 14-month high of 6.21 percent, breaching the Reserve Bank of India's upper tolerance limit.

With mounting inflationary pressures and sentiment growing cautious, the market is under a steady cloud, as investors await signs of relief.

At 9:20 am, the Sensex was down 101.46 points or 0.13 percent at 78,573.72, and the Nifty was down 57.50 points or 0.24 percent at 23,826.00. About 1090 shares advanced, 1569 shares declined, and 112 shares unchanged.

"We expect markets to remain volatile with stock-specific action on account of balance Q2 numbers to be announced this week," said Siddhartha Khemka, Head of Research and Wealth Management at Motilal Oswal. The market sentiment has turned cautious mainly due to heavy foreign investor outflows, high valuations, and lackluster Q2 earnings pressuring the indexes.

Foreign institutional investors (FIIs) continued their heavy selling spree in the cash markets yesterday, offloading over Rs 3,000 crore. Their total sell-off since the start of the month has now surged to Rs 25,000 crore. While domestic institutional investors have stepped in to buy the dip, their efforts have been no match for the selling pressure, leaving the market down in the red.

Mid- and small-cap indices followed the downward trend, sliding 0.5 percent and 0.6 percent, respectively. These broader markets, which have surged nearly 25 percent year-to-date compared to Nifty’s 13 percent rise, showed signs of fatigue. Meanwhile, the market volatility index India VIX rose over 2 percent, rising to 15 levels.

Food delivery major Swiggy will be making headlines today as the stock makes its debut on the bourses at 10 am. As per data,  there is no grey market premium (GMP) on Swiggy's listing, indicating that the mega IPO of Rs 11,327 crore is expected to have a flat listing.

FMCG major Britannia Industries extended losses, falling 2 percent after the JimJam maker shared its earnings report for the quarter ended September, which came in under expectations. Fears of weak consumer demand are keeping investors cautious on the counter.

PepsiCo bottler Varun Beverages was also buzzing in trade,  falling 1 percent after the company announced the acquisition of two African companies. Last month, HSBC reaffirmed its Buy rating, setting a target price of Rs 780 on the player. HSBC is optimistic about the company’s financial health and growth, driven by strategic initiatives.

From a technical standpoint, With yesterday’s drop in the Nifty, all eyes are now on a key support area between 23,700 and 23,779. If Nifty slips below this zone, it could soon test a significant long-term average, which is around 1.5 percent lower than Tuesday’s closing," said Akshay Chinchalkar, Head of Research at Axis Securities. "This would mark the first time Nifty has approached this level since it rose above it 19 months ago. While the recent declines haven't overly strained the daily momentum, the weekly trend indicators are now showing their weakest levels since March last year," he added.

Nifty Auto continued its plunge among sectors, falling over a percent in early trade. Auto majors like M&M, Maruti Suzuki,  Bajaj Auto, and Hyundai Motor slipped over 2 percent to lower the index. Nifty, Pharma, Healthcare, and Realty also slipped up to a percent on the bourses.

Nifty Bank notched up higher, albeit marginally.

NTPC, Asian Paints, Tata Motors, Bharti Airtel, and HDFC Bank were the top gainers on the Nifty. Losers included M&M, BPCL, Maruti Suzuki, Hero MotoCorp, and Tata Steel.