Market benchmark Sensex succumbed to selling pressure on Wednesday as investors cashed in gains after a three-session rally, with banking and finance shares leading the selloff.
A bearish trend in global markets and a depreciating rupee added to the selling momentum, traders said.
“The Covid cases are moderating in India and Fed's music will remain the same, so chances of USDINR bouncing are very low,” Rahul Gupta, Head of Research, Currency, Emkay Global Financial Services.
According to Gupta, with the USDINR spot hovering around 73 zone, the only fear is of RBI intervention in between 72.75-73 zone to curb any excess volatility. But in absence of RBI, the downtrend in USDINR spot may continue and USDINR spot may trade in between 72.75-73.30.
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Giving up the 50,000 mark, the 30-share BSE index ended 290.69 points or 0.58 per cent lower at 49,902.64. On similar lines, the broader NSE Nifty fell 77.95 points or 0.52 per cent to close at 15,030.15.
Bajaj Finserv was the top laggard in the Sensex pack, shedding 1.68 per cent, followed by HDFC, M&M, Bharti Airtel, UltraTech Cement, Kotak Bank and HDFC Bank.
On the other hand, Sun Pharma, Nestle India, Tech Mahindra, Bajaj Auto and Axis Bank were among the gainers, spurting up to 1.82 per cent.
"The recent sharp rally has triggered some caution for the near-term. The global market was tentative ahead of the announcement of Fed minutes, this was mirrored in the domestic market, though it is not expected to be hawkish.
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"Optimism gained from declining Covid cases resisted a sharp correction in domestic market," said Vinod Nair, Head of Research at Geojit Financial Services.
India added 2.67 lakh fresh Covid-19 cases in a day, though fatalities touched a record 4,529, pushing the coronavirus death toll to 2,83,248, according to the Union Health Ministry data updated on Wednesday.
Sector-wise, BSE telecom, metal, finance, auto and bankex lost up to 1.16 per cent, while realty, power, healthcare and utilities indices closed higher.
In the broader markets, the BSE midcap and small-cap indices outperformed the benchmark, climbing up to 0.53 per cent.
Meanwhile, halting its three-day winning run, the rupee declined by 13 paise to close at 73.18 against the US dollar. Snapping its three-day winning run, the rupee on Wednesday declined by 13 paise to close at 73.18 against the US dollar in line fall in Asian currencies ahead of the release of US Fed minutes.
At the interbank foreign exchange market, the domestic currency opened at 73.02 against the American currency, but pared the gains to close at 73.18, registering a decline of 13 paise over its previous close.
"The Indian rupee has seen a significant rise in the past few sessions amid a strong rally in global equity markets and a softer dollar index. However, it has pared gains today as the risk sentiment has weakened on concerns over the new virus strain in the Asia Pacific region, which could hamper growth," said Sugandha Sachdeva, Vice President - Commodity and Currency Research, Religare Broking.
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According to Sriram Iyer, Senior Research Analyst at Reliance Securities, the Indian rupee depreciated for the first time in four sessions against the US dollar this Wednesday, weighed down by importers' dollar demand and a weak regional risk appetite.
Global equities struggled as elevated commodity prices stoked inflation fears.
In Asia, bourses in Shanghai and Tokyo ended on a negative note. Markets in Europe too were trading with losses in mid-session deals.
