According to reports, Sensex slipped by close to 400 points to reach 43,160 during the second half of the day while Nifty Bank index tanked by 2 per cent.
The 30-share BSE index was trading 226.79 points or 0.52 per cent lower at 43,366.88 in early trade while the broader NSE Nifty slipped 60 points or 0.47 per cent to 12,689.15.
The slip in domestic indices were observed soon after Finance Ministry announced third stimulus package of the Centre as country's economy continue to reel under the aftermaths of Coronavirus inducted lockdown.
Announcing a fresh round of stimulus package and terming it as 'Atmanirbhar Bharat 3.0', Centre today laid down a total of 12 new measures to support the economy and industry, ranging from employment generation, collateral-free credit for stressed sectors to subsidised fertiliser for farmers.
Sitharaman announced the 'Atmanirbhar Bharat Rozgar Yojana' to incentivise creation of new employment opportunities during the Covid-recovery phase.
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Experts believe that the sharp dip in stock market could be due to the announcement of the stimulus package by the Centre, which is itself reeling under severe revenue crunch.
The last economic revival package was announced by the Centre in May this year amid the nationwide Covid-19 lockdown in order to revive country's fiscal condition with focus on providing liquidity in the economy and providing collateral-free credit for small businesses.
In today's announcement, the government has also announced an Emergency Credit Line Guarantee Scheme (ECLGS 2.0) for providing much needed relief to stressed sectors by helping entities sustain employment and meet liabilities.
The ECLGS scheme for MSMEs, MUDRA loan borrowers and individuals has been extended till March next year. FM Sitharaman also announced the 'Atmanirbhar Bharat Rozgar Yojana' to incentivise creation of new employment opportunities during the Covid-recovery phase.
In a bid to boost housing sales, Sitharaman announced an increase in the permitted differential between the circle rate and agreement value of housing units to 20 per cent from the current mandated limit of 10 per cent till June 30.
The increase in differential will be applicable in residential units of value up to Rs 2 crore.
Centre will also make an additional outlay of Rs 18,000 crore for Pradhan Mantri Awas Yojana (Urban), which is likely to help ground 12 lakh houses and complete 18 lakh houses, as per the Finance Minister.
Sitharaman said that the total value of the government's stimulus support so far is about Rs 30 lakh crore, post the three rounds of 'Atmanirbhat Bharat' economic measure and the measures by the Reserve Bank of India amid the pandemic. Total stimulus accounts for 15 per cent of the GDP, with the Central government's component being 9 per cent and the rest of the RBI.