Profit booking, weak rupee dent equity markets

Profit booking, coupled with heightened chances of a US rate hike and a weak rupee depressed the Indian equity markets on Wednesday.

However, the key indices of the Indian equity markets pared their initial losses during the last hour of the day's trade.

Consequently, the barometer 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange (BSE) provisionally closed the day's trade flat.

Similarly, the wider 50-scrip Nifty of the National Stock Exchange (NSE) ended marginally in the green. It inched up by two points, or 0.02 percent, at 7,716.50 points.

The Sensex, which opened at 25,322.10 points, provisionally closed at 25,337.56 points (at 3.30 p.m.) -- up 7.07 points or 0.03 percent from the previous day's close at 25,330.49 points.

The Sensex touched a high of 25,367.81 points and a low of 25,156.82 points during the intra-day trade.

The BSE market breadth slightly favoured the bears -- with 1,319 declines and 1,283 advances.

Market analysts pointed out that value buying triggered after price correction helped markets pare their initial losses.

Furthermore, an increased potential of an interest rate cut by the Reserve Bank of India (RBI) restored investors' confidence.

In contrast to the flat closing, the equity markets remained in the negative territory throughout the day's trade as profit booking dented sentiments.

Initially, both the key indices of the Indian equity markets opened on a flat note, in sync with their Asian peers. Global markets dipped after terror attacks struck Brussels on Tuesday.

In addition, investors were seen hesitant to chase prices higher due to the heightened chances of a US rate hike next month.

A hike in the US interest rates is expected to lead away Foreign Portfolio Investors (FPIs) from emerging markets such as India.

Besides, a weak rupee and unwinding of long positions ahead of the derivatives expiry and the financial year end dampened sentiments.

The rupee opened at 66.78 to a US dollar from its previous close of 66.72 to a greenback. The rupee's weakness can be attributed to a strengthening of the US dollar.

The US dollar index has continued to strengthen for the fourth consecutive day on Wednesday, after the heightened potential of a US rate hike in April.