India’s benchmark indexes extended declines for the third consecutive session on Thursday, dragged by IT stocks, after the US Federal Reserve signalled that interest rates could stay higher for longer.

The Nifty 50 was down about 0.6% to 19,776.55 points as of 10:00 a.m. IST - its lowest since Sept 8 - while the S&P BSE Sensex declined 0.7% to 66,348.01 points.

Both the benchmarks are down about 2% so far this week, after gaining 2% each and hitting all-time highs in the previous week.

The Fed on Wednesday held key interest rates unchanged as widely expected, and revised economic projections higher with warnings that the battle against inflation was far from over.

“The market was not expecting the pause to be longer and interest rates to remain high,” said Aishvarya Dadheech, fund manager at Ambit Asset Management.

Indian stocks drop over 1%, led by HDFC Bank, Reliance

“So at these valuations, because of this (Fed) event, a broad-based sell-off (in India stocks) can’t be ruled out,” he added.

The information technology (IT) index led losses, declining about 1%, with sector major HCL Tech and Tata Consultancy Services among the top losers on the Nifty benchmark, slipping 2% and 1.8%, respectively. Most Indian IT companies generate a significant share of revenues from the United States.

The more domestically-focussed mid-cap index was trading flat while small-caps fell 0.2%.

“In our view, the intraday market structure is weak, but due to temporary oversold conditions, we may see range-bound activity in the near term,” Shrikant Chouhan, head of research (retail) at Kotak Securities said in a note.

The banking index fell for the second consecutive day, slipping 0.5%, with India’s second-largest private lender ICICI Bank dropping 2%.

Among individual companies, state-run hydropower generation company SJVN slumped as much as 10% after the Indian government said it will sell an up to 4.92% stake in the company this week.