The Indian market corrected sharply on February 1 with Sensex falling more than 1,000 points after D-Street was left unimpressed with the Union Budget 2020.

The carnage wiped off nearly Rs 3.6 lakh crore investor wealth. Sharp correction and coronavirus fear further dented the sentiment.

Benchmark indices saw the biggest single-day fall in nearly five years. The BSE Sensex closed below psychological 40,000 mark, down 987.96 points or 2.43 percent at 39,735.53.

The Nifty50 fell below 200-day moving average (which was placed at 11,650) intraday but managed to defend the same level at closing. The index plunged 300.20 points or 2.51 percent to 11,661.90 and formed Long Black Day candle on daily charts.

"The market saw a sharp sell-off during Budget, as expectations were sky-high. The market expected an overhaul of personal income tax slabs, whereas we expected only a minor tweak, in a year that has seen flat tax revenue growth. Market participants possibly also expected more measures to revive economic growth and ignored the containment of fiscal deficit in FY21 to only 3.5 percent. We are quite satisfied with the budget math however," Amar Ambani, Senior President and Head of Research, Institutional Equities, YES Securities told Moneycontrol.

All sectoral indices, barring IT, closed in red with Nifty Realty falling the most (down 8 percent). Bank, Auto, FMCG and Metal indices were down 2-3 percent.

Among largecaps, ITC, Tata Motors, HDFC, L&T, Zee Entertainment, Bajaj Finserv, SBI, ONGC and Coal India plunged 4-7 percent. However, TCS, HUL, Nestle India and Tech Mahindra bucked the trend, rising 1-4 percent.

The broader markets also fell in line with benchmarks as the Nifty Midcap index slipped 2.75 percent and Smallcap index lost 2.92 percent. More than three shares declined for every share rising on the NSE.

Ajit Mishra, VP Research at Religare broking said he would continue to see the overhang of the Union Budget next week as well. Besides, weak global cues would further add to the participants' worries, he added.

According to Mishra, further fall is imminent, though there could be an intermediate pause.

"Nifty has tested its critical support zone of 200 EMA on the daily chart which is currently around 11,665 and the next support will be at 11,540. In case of any rebound, 11,750-11,840 would act as a hurdle," he said.

Only Indian equity market opened for trade today, which took cues from global peers that fell sharply amid fears of the potential impact of China's fast-spreading coronavirus on the global economy.

Dow Jones Industrial Average on Friday fell 600 points, while European markets lost over a percent each.

Back home, foreign institutional investors were net sellers during the week (till Friday) to the tune of nearly Rs 8,000 crore including Friday's more than Rs 4,000 crore selling ahead of Budget.