The benchmark indices closed Samvat 2077 with losses in an otherwise volatile session as nervousness prevailed ahead of a crucial Fed policy meeting where the US central bank could announce reducing its monthly bond purchases (the taper affect).
The 30-share Sensex oscillated more than 809 points with sentiment buoyed by service sector growth at its highest in more than a decade in October.
Caution soon prevailed as the market players began to take stock of the Fed policy meeting that is widely expected to unwind its monthly bond purchases of $120 billion. The markets are focussed on Fed’s inflation outlook which could give some indication on possible interest rate hikes sometime in the next calendar year.
At Dalal Street, the Sensex opened in the green at 60275.21 and rose to an intra-day high of 60361.82. However, selling soon set in and the index fell to a low of 59552.49 after which it settled at 59771.92, a fall of 257.14 points or 0.43 per cent.
The broader NSE Nifty slipped 59.75 points, or 0.33 per cent, to 17829.20.
The domestic markets thus closed Hindu calendar year Samvat 2077 with strong gains. While the Sensex rallied 16133.94 points, or 36.97 per cent, the Nifty gained 5048.95 points or 39.50 per cent. The markets will have a special one-hour muhurat trading session on Thursday to mark the beginning of Samvat 2078.
“After a sideways movement post its positive opening, the indices took a downturn as major global indices traded weak ahead of the Fed policy announcement. The Federal Reserve is widely expected to announce the tapering of its asset purchase programme in the near-term, while any hint on an interest rate reversal is keeping investors on the edge,” said Vinod Nair, head of research at Geojit Financial.
He added that any indications showing a faster rate of tapering will have a negative effect on the equity markets.
Siddhartha Khemka, head — retail research, Motilal Oswal Financial Services, noted that on the domestic front, services PMI data came in better than expectation.
The macro-economic trends continued to see good recovery, with high-frequency indicators improving month on month. Companies have largely delivered on their earnings in line with expectation.
“However, valuations are still at a premium and would demand consistent earning delivery going ahead. Thus the market might continue to remain under pressure till valuations get reasonable and global cues improve,’’ he said.
In Wednesday’s trade, among the sectoral indices, BSE telecom, bankex, auto, consumer durables and finance ended up to 1.50 per cent lower, while capital goods, realty, metal and industrials settled with gains. The broader BSE midcap and smallcap indices slipped up to 0.32 per cent.