Indian equity markets yesterday were pulled lower on the back of global cues, such as the US Fed’s interest rate decision and uncertainty over the upcoming US presidential election.
The wider 51-scrip Nifty of the National Stock Exchange (NSE) edged down by 29.05 points or 0.34% to 8,484.95 points.
The barometer 30-scrip sensitive index (Sensex) of the BSE hit its lowest level in over 16 weeks.
It opened at 27,518.06 points, to close at 27,430.28 points – down 96.94 points or 0.35%, from its previous close at 27,527.22 points.
The Sensex touched a high of 27,600.74 points and a low of 27,399.26 points during the intra-day trade.
The BSE market breadth was skewed in favour of the bears – with 1,775 declines and 1,174 advances.
On Wednesday, the benchmark indices had closed on a lower note, depressed by weak global cues.
The barometer index had declined by 349.39 points or 1.25%, while the NSE Nifty lost 108.15 points or 1.25%.
Initially yesterday, the key equity indices opened on a flat note in sync with their Asian peers.
The global markets remained cautious over the US Fed’s Federal Open Market Committee (FOMC) meet decision on Wednesday, which indicated a possible rate-hike in December on the back of economic recovery, while keeping its short-term interest rate intact for the current month. A hike in the US interest rates can potentially lead foreign portfolio investors (FPI) and funds away from emerging markets such as India. It is also expected to dent the business margins of corporates as access to capital from the US will become expensive.
Besides, positive domestic macro-economic data – the Nikkei India Services PMI (Purchasing Manager’s Index) – released earlier during the day, could not cheer the equity markets. The data showed a rise of the index to 54.5 in October from 52 in September, indicating a healthy growth in the services sector.
Ending its two-day rally, the rupee yesterday closed down by 4 paise at 66.75 per dollar due to fresh demand for the US currency from corporates and banks amid capital outflows from stock markets.
Forex market sentiment remained cautious and witnessed lethargic trade as currency traders preferred to stay on the sidelines against the backdrop of pre-US election jitters alongside confusing signals from the Federal Reserve.
Heavy capital outflows in the midst of an impending US central bank rate hike amid global volatility largely kept rupee momentum under check. Traders are nervous at this juncture ahead of the vote on November 8, particularly after recent polls showed Donald Trump gaining ground on Hillary Clinton.