Nifty ends below 7,850 ahead of US FOMC meet

Markets ended lower, amid weak global cues, as investors booked profits in financial shares which had gained in the previous session on rate cut hopes by the RBI amid easing consumer price inflation for August.

Further, traders maintained cautious stance ahead of the two-day US Federal Reserve meet which begins tomorrow.

The 30-share Sensex ended at 25,705.93 down 150.77 points and the 50- share Nifty slipped 43.15 points to close at 7,829.10.

The broader markets ended weak in line with the benchmark indices- BSE Midcap and Smallcap indices fell nearly 1% each.

Market breadth on the BSE ended weak with 1,523 shares declining and 1,096 shares advancing.

In the currency front, the Indian rupee was trading lower by 12 paise at 66.45 to the US dollar amid demand from banks and importers while weakness in domestic equities also dampened sentiment.

GLOBAL MARKETS

Concerns over China kept financial markets on edge on Tuesday, with an underwhelming reaction to recent data and Beijing's efforts at corporate reform helping push European and Asian stocks lower. Europe's main markets had inched higher in early trade, with investors avoiding firmer bets ahead of the first meeting of the U.S. Federal Reserve in years at which a possible rise in interest rates has been a live issue.

But worries about the impact of any Fed hike on dollar borrowers across the developing world, and its effect on growth, continued to dominate, with Shanghai stocks falling another 3.5 percent and oil at just $46 a barrel.

While Tokyo inched higher, MSCI's broadest index of Asia-Pacific shares outside Japan erased early gains to fall 0.7 percent. An hour after opening, the main indices in Frankfurt, London and Paris were up to 1 percent lower.

MARKET VIEW

According to K. Subramanyam, Co-Head Equity Advisory, Altamount Capital, “There are strong indications that the Fed hike will come either in September or at the next meeting going by the improving macros like falling unemployment, reducing retail debt, etc. The market might see a knee jerk reaction but likely to stabilise as an improvement in the US economy will finally be a boon to economies which cater to the US. Any correction should be utilised to add quality stocks. Domestically the time may be ripe for a rate cut on the eve of the festive season and inflation also on a gradual downtrend."

SECTORS & STOCKS

BSE Metal and Capital Goods indices plunged over 2% followed by counters like Consumer Durables, Auto, Banks and Realty, all falling down between 1-2%. However, BSE FMCG index gained around 0.4%.

The top losers from the Sensex pack were Tata Steel, Vedanta, Tata Motors, Hindalco, L&T and Axis Bank.

According to Moody's Investors Service forecast, prices of metals are likely to remain weak in 2016 due to sharp decline in global commodity prices since June. The reasons given are oversupply and subdued demand from China, the world's largest producer and consumer of metals. Shares of Tata Steel, Vedanta, Hindalco and Coal India plunged between 0.5-4%.

Financials witnessed profit after gains in the previous session. Axis Bank, HDFC, HDFC Bank and ICICI Bank were down 1-2% each.

On the gaining side, NTPC, Sun Pharma, HUL, Maruti Suzuki and ITC surged between 0.5-1.2%.

Maruti Suzuki India ended higher by over 0.5% after the RBI has allowed foreign investors to invest up to 40% of the paid up capital of the company under the portfolio investment scheme.

FMCG majors like ITC and HUL gained by almost 1% amid easing consumer price inflation in August.

Sun Pharma was up 1%. The pharma major is planning to acquire US Based InSite Vision Inc according to media reports.

SMART MOVERS

Shares of aviation companies - Jet Airways and SpiceJet- ended higher between 2-6% on the BSE in an otherwise subdued market after InterGlobe Aviation secured approval from the Securities and Exchange Board of India (Sebi) for Rs 2,500-crore initial public offering (IPO).

Bharat Forge dipped 6% to Rs 960, its lowest level since January 13, 2015 on the National Stock Exchange (NSE).

Gujarat Gas was locked in lower circuit of 5% at Rs 646 on the National Stock Exchange (NSE) after relisting of the equity shares of the company post amalgamation.

Shares of Nava Bharat Ventures soared over 17% in otherwise weak market after the company announced that it has entered into a pact with Tata Steel for conversion of chrome ore into ferro chrome.

With Reuters input