Sensex dips 114 points ahead of US Fed meet

MUMBAI: In volatile trading, the Sensex on Wednesday washed out initial gains and closed in the red as caution prevailed ahead of the US Federal Reserve’s policy statement , which is expected to give direction on US interest rate hike.

The index resumed higher at 28,767 and firmed up further to 28,807 on strong buying on the back of foreign inflows. It later fell to 28,547 on fresh selling, before concluding at 28,622, a loss of 114.26 points, 0.40%.

The broader Nifty fell by 37.40 points, or 0.43%, to 8,686.

The Fed is expected to lay the groundwork for its first interest rate hike in nearly a decade during its two-day meeting that begun on Wednesday.

An interest rate hike in the US could prompt foreign funds to move out of emerging markets such as India. The resultant dollar outflow could weaken the rupee.

RBI governor Raghuram Rajan said the central bank is keeping a close watch on the US Fed meeting outcome. “We are much better ptepared and have much ample reserve than previous year.”

The RBI governor also met finance minister Arun Jaitley ahead of the customary postbudget board meeting scheduled on March 22.

Analysts said overall market sentiment was hit after IMF managing director Christine Lagarde’s warned that an interest rate hike by the Fed could pose a risk to emerging economies.

“Markets are awaiting the outcome of Fed’s meeting. A sharp fall in crude oil prices due to global concerns of oversupply dampened sentiment,” said Vineeta Mahnot, equity research analyst, Hem Securities.

As many as 18 Sensex stocks finished lower led by NTPC (down 3.11%), BHEL (down 2.20%) and Tata Motors (down 2%).

(With inputs from agencies)