"Market participants at this point of time have discounted a 75bps rate hike but a 100bps rate hike could further strengthen the dollar against its major crosses," said Motilal Oswal Financial Services in a note to clients. "Recent inflation number suggests that the Fed could stick to a 75bps rate hike but cool-off in commodity prices from its recent highs could trim expectation of aggressive rate hike in the coming meeting."
Infosys ended down 3.4% as the top laggard on the Sensex. Axis Bank, Dr Reddy's Laboratories and Hindustan Unilever ended down around 3% each. Wipro, HCL Technologies and Kotak Mahindra Bank ended down nearly 2% each.
India's stock indices ended down nearly 1% on Tuesday led by technology stocks as investors fretted over the possibility of a sharp hike in interest rate in the US on Wednesday. This was the second consecutive day of loss for the indices.
The US Fed is widely expected to raise interest rates by 75 basis points when it announces the policy meeting outcome late Wednesday in a bid to tackle rising inflation. Investors will also be looking at the commentary from the Fed for further cues.
The Sensex ended down 497.73 points, or 0.89%, at 55,268 and Nifty ended down 147.15 points, or 0.88%, at 16,483. The IT index ended down nearly 3% and was the worst performer among sector indices.
"Market participants at this point of time have discounted a 75bps rate hike but a 100bps rate hike could further strengthen the dollar against its major crosses," said Motilal Oswal Financial Services in a note to clients. "Recent inflation number suggests that the Fed could stick to a 75bps rate hike but cool-off in commodity prices from its recent highs could trim expectation of aggressive rate hike in the coming meeting."
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