The Fed minutes, due later in the day, and key labour market data, expected later this week, will help assess if the optimism over potential rate cuts is justified.
The 30-share BSE benchmark Sensex plunged 536 points or 0.75% to settle at 71,356. The broader NSE Nifty fell 148 points or 0.69% to end at 21,517.
Among the Sensex stocks, JSW Steel and Tata Steel were the top laggards, falling over 3% each. Infosys, Wipro, Tech Mahindra, TCS, and Nestle India also ended in the red. On the other hand, IndusInd Bank, ITC, Bharti Airtel, SBI, and Axis Bank closed in the green.
Adani Group stocks closed up to 12% higher following a favourable verdict from the Supreme Court. In the 10-pack group of stocks, Adani Energy Solutions was the top gainer, rising nearly 12%, while Adani Total Gas closed with a 10% upper circuit. Adani Power also closed with a 5% upper circuit.
On the sectoral front, Nifty IT closed 2.5% lower ahead of the release of the Fed minutes. Nifty Metal and Nifty Financial Services also closed 1.8% and 0.4% lower, respectively.
The market breadth was skewed in the favour of the bulls. About 2,198 stocks gained, 1,638 declined, and 109 remained unchanged on the BSE.Experts view
The lack of fresh triggers and concerns over valuation influenced investors to stay sidelined, said Vinod Nair, Head of Research at Geojit Financial Services.
“Importantly, the market was waiting for the Fed minutes for rate insights. As a rebound in the US 10-year yield and an uptick in the dollar index indicate whether Fed may not turn as dovish as expected,” Nair added.
Jatin Gedia, Technical Research Analyst at Sharekhan, said: “We believe that the fall is a retracement of the previous rise from 20,976 – 21,834 and not a trend reversal and thus this dip should be used as a buying opportunity.”
Global markets
Global stock markets extended a New Year slide on Wednesday as market optimism about early US interest rate cuts ebbed and the latest escalation of hostilities in the Middle East weighed on sentiment.
Europe’s STOXX 600 share index dipped 0.1% and Asia Pacific shares outside Japan fell 1.3%. The tech-focused Nasdaq slid 1.6% on Tuesday, dragged lower by a nearly 3% drop in Apple to a seven-week low after Barclays downgraded its shares.
