Fed-inspired rally fizzles out; Nifty tanks 51 pts

A more dovish than expected Federal Reserve's stance on monetary policy failed to generate enough market excitement as the initial euphoria proved to be short-lived following a sudden bout of implied volatility.
The NSE flagship index, CNX Nifty surrendered its early gains and closed 51 points lower on broad-based selling pressure.
After a strong start to trade in line with equity markets across the global and tracking overnight developments, the key indices reclaimed the psychological 8,700 mark and maintained its rallying momentum with consolidating its gains bolstered by a dovish comments on interest rates, prompting investors to push back expectations of an imminent US interest rate hike.

The index was trading in the positive terrain till late afternoon before burning through a free fall as volatility returned to the market in a big way in last hour of trade leading to heavy unwinding led by front-line heavyweight as investors booked profits on valuation concerns amid skepticism over the upcoming earnings season.
The bellwether nosedived over 173 points in the last hour of trade from the intra-day high levels.
Elsewhere, barring the Japanese Nikkei, most equities ended with strong gains in the region. European markets are trading firmly higher in early morning session.

The broad-based 50-share Nifty opened higher at 8,749.45 and swung widely between a high of 8,788.20 and a low of 8,614.65 before finishing at 8,634.65, a sharp fall of 51.25 points, or 0.59 per cent, over its last close.

Banking and financials showed the most volatility among the sectoral peers and witnessed heavy unwinding with the PSU Bank indices plunging by 2.41 per cent. It followed by Bank
Nifty 1.76 per cent, Realty 1.58 per cent along with FMCG, IT, Auto and Infra. Mid-cap and Small-cap too ended lower.
However, Healthcare and Metal withstood the slide.
Axis Bank, ICICI Bank, HDFC Bank, SBI, kotak Bank, Bank of Baroda, IDFC, PNB and Indusind Bank contributed to the large chunk of decline. Other key losers included Reliance, Tata Motors, ITC, L&T, HCL-Tech, Tech-M, ZEE, BPCL, Ultratechcem, M&M, Grasim, Sesa Sterlite, BHEL, Heromotoco, ACC and Maruti.

Among the gainers were TCS, Lupin, Asian Paints, HDFC, ONGC, NTPC, GAIL, Tata Steel, Wipro, Sunpharma and Infosys.
Turnover in the cash segment rose to Rs 18,595.69 crore compared to Rs 18,203.77 crore yesterday. A total of 8,575.44 lakh shares changed hands in 73,03,934 trades. The market capitalisation at NSE stood at Rs 100,93,871 crore.