Stocks bleed ahead of key Fed meeting

Benchmark indices fell over 1% to their lowest in five weeks

Investors took money off the markets ahead of the fiscal year-end as key US rate decisions loomed, while experts cautioned about further losses after a year of sterling gains. The benchmark Sensex and Nifty indices fell over 1% to their lowest in five weeks, bringing losses over the past one week to more than 2%. While the BSE Sensex fell 1% to 72,012.05 points, the NSE Nifty closed 1.1% lower at 21,817.45. The broader markets suffered, too, with both Nifty Smallcap 250 and Nifty Midcap 100 settling 1.2% lower.

With the Nifty falling below the crucial support level of 21,900, market experts said it may slip another 200-300 points.

“So far as Nifty goes, we expect 21,800 to act as a support, which, if broken decisively, could result in the bellwether testing 21,100,” said Gaurav Dua, head, capital market strategy at Sharekhan by BNP Paribas. He explained that the markets had run up phenomenally, especially the mid- and small-cap segments, “where speculative froth had arisen and this is being corrected, which is healthy”.

The Nifty IT index slipped 2.9%, dragged down by Tata Consultancy Services Ltd (TCS) which fell 4.37%. Among index heavyweights, Infosys Ltd, Reliance Industries Ltd (RIL), Larsen and Toubro Ltd (L&T) and ITC Ltd led the losses.

“Following Bank of Japan’s decision to hike interest rates for the first time in 17 years, Asian peers’ mood turned sour, which pulled the Indian market to continue its recent pessimism,” Vinod Nair, head of research, Geojit Financial Services said.

The Nifty has gained 28% in the past year while the Sensex is up 24%. Market participants believe a further correction cannot be ruled out,