Sensex ends 95 points lower, Nifty below 8,200 as investors brace for US Fed outcome

The benchmark indices settled the day lower as caution prevailed ahead of the US Federal Reserve’s two-day policy meeting that concludes later today. Investors also reacted to the wholesale price index (WPI)-based inflation data, which came in during market hours. 

The S&P BSE ended at 26,602, down 94.98 points, while the broader Nifty50 quoted 8,182, down 39 points.

Broader market underperformed the headline indices with BSE Midcap index and BSE Smallcap index losing 0.82% and 0.85%, respectively.

The market breadth, indicating the overall health of the market, remained weak. On the BSE, 1,729 shares declined and 909 shares rose. A total of 149 shares remained unchanged.

"The market mirrored the volatility seen in other emerging markets and settled below the 8,200 mark as investors remain cautious ahead of today’s Fed policy. A 25 bps rate hike is widely expected but any hawkish comment would act as a cloud over the EMs. Back home, both the CPI and WPI inflation has declined in November after currency shortage depressed the consumer demand. This may provide RBI a room for ease in interest rate," said Vinod Nair, Head of Research, Geojit BNP Paribas Financial Services.

Sectors and stocks

Coal India was the top loser and lost 4% on the BSE after the company reported a slump in its consolidated profit for the September quarter. ONGC shed 2% ahead of the stock going for ex-bonus in the ratio of 1:2.

Sectorally, BSE Metal index shed the most (down 1.70%), led by losses in Coal India (down 4.42%), SAIL (down 2.96%) and Vedanta (down 1.91%). Other sectoral losers included BSE Telecom, BSE Basic Materials and BSE Capital Goods.

Among gainers, Reliance Industries (RIL) rallied for the fifth straight session to settle at Rs 1,060, up 1.93%. The stock has outperformed the market by gaining 6.7% so far in December.

Wockhardt gained over 4% in intraday deals after the company said the UK health regulator has confirmed that its Daman-based manufacturing facility complies with good manufacturing practices (GMP). 

Market prices in 25 bps Fed rate hike

Broadly investors have priced in a quarter percentage point rate hike with two more to follow next year. Any hint that the Fed may move more aggressively would likely send the dollar higher and jolt emerging markets.

Investors are also worried that volatile global markets could prevent the Reserve Bank of India from cutting rates next year.

“With the US GDP on an upswing, it is almost certain that the US central bank will increase interest rates in December. Rise in interest rates in the USA can lead to selloff in emerging market equities. India is also likely to be impacted,” said Atul Kumar of Quantum AMC.

WPI falls to five-month low 

The wholesale price index (WPI)-based inflation fell to a five-month low of 3.15% in November from 3.39% in the previous month, as the rate of rise in food prices were dampened by the cash crunch following the demonetisation of high-value currency notes from November 8 onwards. 

The data came a day after the release of consumer price index-based inflation numbers that saw the rate of price rise cooling to the lowest in November in the new series.  

Global markets

Overseas, European and Asian stocks edged lower as investors kept an eye on a key US Federal Reserve meeting due today. 

European shares retreated from an 11-month high with the pan-European STOXX 600 down 0.2%. Japan's Nikkei and Hong Kong’s Hang Seng indices ended little changed, while China’s Shanghai Composite settled the day 0.46% lower.