Indices slide for second day ahead of Federal Reserve decision

Domestic equity indices nursed losses for the second straight session on Wednesday, the last day of Samvat 2077, as investors stayed on the sidelines ahead of a crucial Fed policy meeting outcome, where it is expected to announce tapering of its pandemic-era stimulus measures.

The Sensex ended 257.14 points or 0.43 per cent lower at 59,771.92. Similarly, the broader Nifty fell 59.75 points or 0.33 per cent to 17,829.20.

Sun Pharma was the top laggard in the Sensex pack, falling 3.06 per cent, followed by IndusInd Bank, Kotak Mahindra Bank, Bharti Airtel, ICICI Bank, M&M, and HDFC Bank. On the other hand, L&T, UltraTech Cement, Asian Paints, SBI, Tata Steel and Bajaj Finance were among the gainers, spurting as much as 3.99 per cent.

SBI jumped 1.14 per cent after the country’s largest lender reported a 69 per cent jump in consolidated net profit at ~8.889.84 crore for the September quarter on account of a decline in bad loans.

"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," said Vinod Nair, Head of Research at Geojit Financial Services.

The Federal Reserve is widely expected to announce the tapering of its asset purchase program in the near-term, while any hint on interest rate reversal is keeping investors on the edge, he noted.

"Any indications showing a faster rate of tapering will have a negative effect on the equity market. Or else, we can expect a reversal from this weak trend.

"On a positive note, despite the rise in input costs, India's Services PMI jumped to 58.4 in October from 55.2 in September owing to ongoing improvements in demand boosting the growth of sales," Nair added.

The domestic markets closed Hindu calendar year Samvat 2077 with stellar gains. The Sensex rallied 16,133.94 points or 36.97 per cent, while the Nifty soared 5,048.95 points or 39.50 per cent.

Markets will have a special one-hour Muhurat trading session on Diwali (Thursday) to mark the beginning of Samvat 2078.

"It will be unfair to assume that the benchmark indices will deliver similar returns in the short term. Benchmark index returns in the short term may not be the right way to assess the investment opportunity.

"A carefully constructed portfolio which harnesses the tailwinds, which the Indian economy is expected to enjoy in the coming years, should deliver 12-15 per cent compounded returns over the medium term," said Krishna Kumar Karwa, Managing Director - Emkay Global Financial Services.

Sectorally, BSE telecom, bankex, auto, consumer durables and finance indices ended up to 1.50 per cent lower on Wednesday, while capital goods, realty, metal and industrials finished with gains.

Broader BSE midcap and smallcap indices slipped up to 0.32 per cent.

Global markets were in wait-and-watch mode ahead of the US Federal Reserve's policy announcement.

Elsewhere in Asia, bourses in Shanghai, Hong Kong and Seoul ended with losses, while Tokyo was closed.

Stock exchanges in Europe were also trading on a negative note in mid-session deals.

Meanwhile, international oil benchmark Brent crude tumbled 1.66 per cent to USD 83.31 per barrel.

The rupee appreciated by 22 paise to close at 74.46 against the US dollar on Wednesday on the back of easing crude oil prices and foreign fund flows into domestic IPOs.

Foreign institutional investors were net buyers in the capital market on Tuesday, as they bought shares worth Rs 244.87 crore, according to exchange data.