Bulls on the Edge, Sensex Slips 736 Pts as Fed Decision Looms

 Our Bureau  

Mumbai: India’s benchmark indices shed over 1% on Tuesday, mirroring the weakness in other Asian markets, as investors a wait the US Federal Reserve's monetary policy decision on Wednesday. Analysts said the near-term market outlook remains negative with investors cutting their shareholdings for tax purposes ahead of the end of the financial year on March 3L BSE's Sensex dropped 736.37 points or 1.01% to close at 72,012.05. NSE's Nifty declined 238.25 points or 1.08% to close at 21,817.45. All sectoral indices ended lower with IT, Media, FMCG, and Pharma indices falling the most. 

While the Fed's two-day meeting ending on Wednesday is expected to keep monetary policy unchanged, investors are looking forward to the central bank’s comments on when it will start cutting interest rates. On Tuesday, Bank of Japan increased interest rates for the first time in 17 vears, ending its longstanding negative interest rate policy “The expectations from the US Fed to cut rates three times this vear have diminished to two and they are expected to remain hawkish given the latest data, which has also driven up the bond yields,” said Andrew Holland, CEO, Avendus Capital Public Markets Alternate Strategies. 

“The rate increase from the Bank of Japan was also expected, however, the currency didn't appreciate as per market expectations, which would have helped emerging economies.” Holland sees the likelihood of ‘downside momentum’ in the market in the short-term. The Nifty Mideap 150 dropped 1.12% and Nifty Small-cap 250 fell 1.18%. Out of the 3,928 stocks traded on the BSE, 1,188 advanced, while 2,633 declined. Analysts expect the market to continue witnessing sharp swings. 

“March has also historically remained volatile due to the end ofvear settlements, which can be seen carried forward to next financial year,” said Sandeep Raina, Executive Vice President- Research at Nuvama Professional Clients Group. 

“The market has been seeing range bound volatility and it has not moved significantly in the last 20 days. We already had expectations of a correction since January, and with expensive valuations and elections around the corner; such movements can be expected to continue.” Analysts said technical indicators are pointing to further weakness.