Markets drops in early trade; focus on US Fed decision

Benchmark indices fell during early trade on Wednesday, influenced by a subdued trend in Asian markets and investor caution ahead of the much-anticipated US Federal Reserve interest rate decision. 

The BSE Sensex retreated 130.21 points to 69,420.82, while the Nifty edged down 29.05 points to 20,877.35.

Major players such as Tata Consultancy Services, Axis Bank, Infosys, Bajaj Finance, Bajaj Finserv, and HDFC Bank led the downturn among Sensex firms. Conversely, NTPC, Power Grid, UltraTech Cement, and Larsen & Toubro gained.

Concerns were further compounded by retail inflation reaching a three-month high of 5.55 per cent in November, driven by increased food prices, notably in vegetables and cereals. 

Despite this, the inflation rate remains within the Reserve Bank of India's comfort zone of less than 6 per cent.

In the global context, market sentiment hinges on the forthcoming message from the Federal Reserve, with investors eagerly awaiting insights that could shape the global market trend. 

V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, stressed upon the importance of the Fed chief's communication in guiding market movements.

While Asian markets like Seoul, Shanghai, and Hong Kong traded lower, Tokyo displayed positive momentum. Contrastingly, US markets closed positively on Tuesday. 

The global oil benchmark, Brent crude, experienced a marginal decline of 0.20 per cent to reach $73.09 per barrel.

Foreign Institutional Investors (FIIs) took a buying stance on Tuesday, acquiring equities valued at Rs 76.86 crore, as indicated by exchange data. 

After a two-day rally, the BSE benchmark retreated by 377.50 points (0.54 per cent) to settle at 69,551.03 on Tuesday, with the Nifty also sliding 90.70 points (0.43 per cent) to 20,906.40. 

The evolving scenario underscores the delicate balance as market participants await crucial cues from both domestic and global fronts.

(With PTI Inputs)