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Benchmark indices are trading near day’s low weighed down by financials, capital goods and index heavyweight Reliance Inds.
By 11:20, the Sensex was lower by 172 points at 20,688 and the Nifty dipped by 55 points at 6,162 levels. The Sensex and Nifty touched an intra-day low of 20,646 mark and 6,151 levels, respectively.
The market sentiment was hit adversely after the Federal Open Market Committee (FOMC) after a two-day monetary policy meeting on Wednesday, 18 December 2013, announced plans to cut its monthly bond purchases to $75 billion from $85 billion, taking its first step toward unwinding the unprecedented stimulus put in place to help the US economy recover from the worst recession since the 1930s.
The decision of the US central bank triggered fears of slowdown in inflow from foreign institutional investors in India. Fed's bond-buying program had become a source of funds for investment in Indian as well as other emerging markets in recent years. In the foreign exchange market, the rupee edged lower against the dollar.
Asian share markets rose on Thursday after the Federal Reserve drew the sting from tapering its stimulus by recommitting to low interest rates, leaving Wall Street at record heights and the dollar galloping above 104.00 yen for the first time since 2008.
The dollar was a major beneficiary, surging as far as 104.37 yen at one point before pausing at 103.99. The euro toppled back to $1.3685, from a $1.3811 top.
Back home, foreign institutional investors (FIIs) bought shares worth a net Rs 1198.60 crore on Wednesday, 18 December 2013, as per provisional data from the stock exchanges.
The rupee weakened sharply in morning trade after the US Fed decided to begin the tapering. At 10:35 am, the rupee was quoting at Rs 62.39 compared with previous close of Rs 62.09 per dollar, a fall of 30 paise.
On the sectoral front, BSE Bankex, Capital Goods, Realty, Oil & Gas, Power, Auto, FMCG and Consumer Durables indices have declined between 1-3%. However, BSE IT index has surged over 2%.
The main losers on the Sensex at this hour include ICICI Bank, L&T, HDFC, ONGC, Bharti Airtel, SBI, Tata Power, BHEL and Bajaj Auto.
Index heavyweight Reliance Industries has dropped by 1%.
Bank pivotal have reversed initial gains in volatile trade. The Reserve Bank of India kept its main lending rate viz. the repo rate unchanged at 7.75% after a monetary policy review on Wednesday contrary to market expectations of a 25 basis point increase.
Shares of information technology (IT) are in demand on the bourses with the Bombay Stock Exchange (BSE) IT index hitting a record high on expectations of a rise in demand in the coming year.
On Wednesday, the US Federal Reserve announced that it would start tapering its massive stimulus program in January, giving a vote of confidence to the recovery in the US economy and job market.
Tata Consultancy Services (TCS), Infosys, HCL Technologies, Wipro, Tech Mahindra and Hexaware Technologies are trading higher in the range of 1-5% on the BSE.
Among other shares, AIA Engineering has surged 6% to Rs 491 in otherwise weak market after the company said it has entered into settlement agreement with Magotteaux International (MI) Belgium, to avoid uncertainty of the outcome of further litigation and legal and other expense including of the current ongoing litigation and to resolve the dispute amicably and avoid further damages and litigation costs.
Power Grid Corporation of India (PGCIL) is trading lower by 3% at Rs 97 on back of heavy volumes after fresh shares of 602 million allotted in follow-on-public offer (FPO) starts trading today.
The market breadth in BSE remains negative with 875 shares declining and 794 shares advancing.
