Sensex and Nifty ended lower on September 18, reversing earlier gains that saw both indices hit record highs ahead of the Fed meeting outcome. Selling pressure in IT and energy stocks dampened the mood, while banking stocks provided some support, gaining on the day of expiry of the BANKNIFTY futures contracts.
At close, the Sensex was down 210 points or 0.3 percent at 82,869 and the Nifty was down 74 points at 25,345. About 1,452 shares advanced, 2,342 shares declined, and 103 shares remained unchanged.
Broader market indices underperformed the benchmarks, with the BSE Midcap and Smallcap indices declining by 0.7 percent and 0.5 percent, respectively. Meanwhile, volatility surged, with India VIX climbing over 6 percent to 13.4 points.
Sameet Chavan, Head of Technical and Derivative Research at Angel One attributed the nervousness in the market to the upcoming FOMC announcement.
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"The tension is playing out as the Fed debates whether to cut interest rates by a quarter-point or a half-point," said Vikram Kasat, Head of Advisory at PL Capital - Prabhudas Lilladher. "Importantly, this rate cut is just the beginning. By itself, one rate cut isn't a panacea for borrowers grappling with high financing costs and has a minimal impact on the overall household budget. What will be more significant is the cumulative effect of a series of interest rate cuts over time," Kasat said.
Among sectoral indices, only two of the 13 were in the green—Nifty Bank and Nifty Private Bank. HDFC Bank, ICICI Bank, and Axis Bank led the gains in the banking index.
On the flip side, the Nifty IT index tumbled over 3 percent, with all 10 constituents falling between 2 and 6 percent. Wipro, Tech Mahindra, Infosys, TCS, and HCLTech were the biggest losers on the Nifty 50 index, each declining 2.6-3.5 percent.
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The sharp decline in the IT sector followed Accenture's 5 percent drop in share price on September 17 after Bloomberg reported that the company "is planning to push back the bulk of its staff promotions by six months in the latest sign of a prolonged slump that's hurt the wider consultancy industry."
"We are permanently changing our primary promotion date from December to June, which is when we have better visibility of our clients' planning and demand," Accenture said.
Analysts also attributed the decline in IT pack to profit booking as IT stocks have outperformed in recent months.
Among the top gainers in the Nifty 50 were ICICI Bank, Nestle, Bajaj Finserv, Bajaj Finance, and Shriram Finance, rising 1.6-4.4 percent. The Bajaj Twins—Bajaj Finance and Bajaj Finserv—rallied as Bajaj Housing Finance more than doubled investors' wealth in a stellar stock market debut. Additionally, Morgan Stanley's 'overweight' rating on Bajaj Finance, forecasting a 19 percent upside, further fueled the rally.
Investors await the Federal Reserve's anticipated rate cut, expected to be the first in four years, as the Fed concludes its two-day meeting today. Fed Chair Jerome Powell has signalled confidence in easing rates, with inflation near the 2 percent target. The September 17-18 Fed meeting marks the sixth monetary policy meeting of 2024.
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