Nifty, Sensex reverse early gains ahead of Fed decision; metals, PSU Banks drag

Stock market news: Benchmark indices NSE Nifty 50 and S&P BSE Sensex opened Wednesday, March 20, on a positive note but swiftly reversed course, mirroring global uncertainties ahead of the US Federal Reserve's interest rate decision

The blue-chip NSE Nifty 50 was trading 0.14 per cent down at 21,786.60, while the broader BSE Sensex was trading 0.13 per cent lower at 71,920.32, as of 11:30 am. This reversal comes after an initial uptick following cues from Asian peers.

"The correction in the domestic market has been triggered by concerns over premium valuations and fears of rate cut delays by the Fed due to hotter-than-expected inflation data," said Vinod Nair, head of research at Geojit Financial Services.

Financial stocks, being the highest-weighted sector, experienced a notable decline of 1 per cent. Meanwhile, the broader small-cap and mid-cap indices dropped 1.1 per cent each, reflecting ongoing pressures and concerns over earnings headwinds amid elevated valuations.

Among individual stocks, Eicher Motors witnessed a significant gain of 4.3 per cent after UBS upgraded its shares to "buy" from "neutral." This upgrade, along with a positive outlook on new Royal Enfield models and attractive valuations, buoyed investor sentiment towards the motorcycle maker.

However, Tata Steel and Hindalco Industries faced losses of 3 per cent each, driven by a downturn in global metal prices and a strengthening US dollar. The Nifty metal index fell 1.7 per cent in response to these developments.

The uncertainty in Indian markets mirrors global hesitancy, with Asian shares wavering amidst concerns that the Fed might signal a slower path of interest rate cuts. Expectations of continued accommodative policy in Japan also weighed on sentiment.

Investors are closely monitoring commentary from the US central bank to gauge the timing of a potential Fed rate cut. Recent inflation data has raised worries of a delay, with markets currently expecting a rate cut in June.

(With Reuters inputs.)