In line with weakness in global markets, the S&P BSE Sensex and NSE Nifty50 ended on a flat-to-negative note after trading in a narrow range on Thursday following the US Federal Reserve's short-term interest rate hike and lowering of the US growth rate.
However, some respite came to the market after the US Fed signalled that its rate tightening cycle is nearing an end. A hike in the US interest rate drives FII investments away from emerging markets like India.
Additionally, a steep decline in crude oil prices and strong gain by the rupee against the US dollar triggered a last-hour buying spree, which, however, failed to lift the market. Consequently, the Sensex closed 50 points lower, snapping its seven-session-long gaining streak.
The rupee settled at 69.70 against the US dollar after closing at 70.40 on Wednesday.
"Fed's decision to increase the short-term interest rate and its indication for a milder path of future increase weakened the dollar which supported the domestic currency," Anuj Gupta, Deputy Vice President - Research, Commodities and Forex, Angel Broking, told IANS.
The benchmark Brent Crude had slipped to $55.48 a barrel, down over 1 per cent, around the closing bell.
Major Asian markets closed on a negative note and the European indices like FTSE 100, DAX and CAC 40 traded in the red.
"The US Federal Reserve raised interest rates on Wednesday, as expected, but forecast fewer rate hikes next year and signalled its tightening cycle is nearing an end in the face of financial market volatility and slowing global growth," said Abhijeet Dey, Senior Fund Manager-Equities, BNP Paribas Mutual Fund.
"The rate hike, fourth of 2018, lifted the target range for the Fed's benchmark overnight lending rate by a quarter of a percentage point to a range of 2.25 per cent to 2.50 per cent."
Analysts said that barring the healthcare and auto indices, which ended the day on a positive note, all other sectoral indices on the National Stock Exchange closed in the red, while on the BSE, metal and telecom stocks along with index pivotals finance and banking stocks ended lower.
The 30-scrip Sensex settled 52.66 points or 0.14 per cent lower at 36,431.67 points after touching an intra-day high of 36,475.52 and a low of 36,202.90.
Similarly, the wider Nifty50 also ended in the red. It lost 15.60 points or 0.14 per cent to close at 10,951.70.
"Technically, while the Nifty has ended in the red, the strong bounce back from the lows indicates that the bulls are not willing to give up easily," said Deepak Jasani, HDFC Securities' Retail Research Head.
"Crucial supports to watch for any further weakness is at 10,880."
Investment-wise, provisional figures from stock exchanges showed that Foreign Institutional Investors (FIIs) sold shares worth Rs 386.44 crore, while Domestic Institutional Investors (DIIs) bought stocks worth Rs 87.96 crore.
Stocks-wise, Yes Bank gained 3.93 per cent and Hero MotoCorp, Mahindra and Mahindra, Asian Paints and Tata Motors ended higher in the range of 1 to 2 per cent.
In contrast, State Bank of India, Wipro, Vedanta, Bharti Airtel and Maruti Suzuki lost up to 2.18 per cent.
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