In a volatile day of trade, Sensex fell as much as 624 points and briefly entered positive territory. The index finished at 59,120, down 337 points, or 0.6 per cent, extending its two-day loss to 600 points, or 1 per cent. The correction in the domestic markets was less compared to most of its global peers. The Nifty50 index fell 89 points, or 0.5 per cent, to close at 17,630. The India Vix index rose 2.6 per cent to finish at 18.82.
This was the third consecutive 75-bps rate-hike by the US central bank, which also indicated that another hike of similar quantum was in store. Most global markets fell as investors digested more rate hikes by other central banks. After Indian indices closed, the Bank of England raised rates by 50 bps.
Overseas investors sold shares worth Rs 2,509 crore on Thursday, as the rupee plunged to a new low against the dollar. The rupee depreciated 1.1 per cent and ended the session at 80.86.
"The Fed turned more hawkish than anticipated, increasing its rate forecast to 4.4 per cent by the end of 2022. The indication is that 125 bps more rate hikes can be expected in the next two policy meetings scheduled this year. The Indian stock market was able to sustain its resilience with limited cuts, but if the rupee continues its weakness, the domestic market would turn less attractive for foreign investors in the short-term, affecting performance," said Vinod Nair, head of research at Geojit Financial Services.
Financial stocks saw the biggest fall, with the Nifty Bank index dropping 1.4 per cent.
Overall market breadth was mixed with almost equal number of stocks advancing and declining on the BSE. The broader market outperformed with the Nifty Midcap 100 and the Nifty Smallcap 100 logging gains of 0.34 per cent and 0.6 per cent, respectively.
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