Sensex, Nifty witness sharp decline ahead of US Fed policy decision

Sensex ended the session at 85,102.69, down 609.68 points or 0.71 per cent. The 30-share index started lower at 85,624.84 against last session's closing of 85,624.84. The index extended the loss further amid overall selling to touch an intra-day low at 84,875.59.

Nifty closed 25,960.55, down 225.90 points or 0.86 per cent.

"The market experienced a broad-based decline, slipping below the 26,000 mark as investors turned cautious ahead of this week’s US Fed policy decision. Despite robust domestic growth figures and the RBI’s recent rate cut, short-term sentiment remains overshadowed by global monetary policy concerns, persistent FII outflows, and currency depreciation," said Vinod Nair, Head of Research, Geojit Investments Limited.

Volatility was further amplified by a surge in Japanese bond yields to multi-year highs, sparking fears of a potential unwinding of the yen carry trade, he added.

Eternal, Trent, Tata Steel, Bajaj Finance, Bajaj FinServ, PowerGrid, Asian Paint, Tata Motors PV, Titan, NTPC, Kotak Bank, L&T, Bharti Airtel, Mahindra and Mahindra, Axis Bank, Hindustan Unilever, Sun Pharma, Ultratech Cement, ITC, Maruti Suzuki, and Infosys were among the losers from the Sensex basket. Tech Mahindra settled in positive territory.

The majority of sectoral indices traded lower amid overall selling. Nifty Fin Services fell 194 points or 0.70 per cent, Nifty Bank slipped 538 points or 0.90 per cent, Nifty Auto dipped 342 points or 1.23 per cent, Nifty FMCG traded 662 points or 1.20 per cent lower, and Nifty IT closed 112 points or 0.29 per cent lower.

Broader indices followed suit as well. Nifty Smallcap 100 fell 456 points or 2.61 per cent, and Nifty Midcap100 ended 1106 points or 1.83per cent lower, and Nifty 100 dipped 281 points or 1.05 per cent.

The rupee slipped by 13 paise to 90.06 against the dollar as prolonged FII selling, weak equity markets, and the lack of clarity on the India–US trade deal continued to weigh on sentiment.

With the Fed policy outcome and India CPI data lined up this week, volatility is likely to remain elevated. The rupee is expected to trade in a weak range of 89.75–90.30, said analysts.