Ahead of the US Federal Reserve policy decision due on Wednesday, Indian equity indices closed in the deep red on Tuesday, dragged by Bajaj twins and profit-booking in index heavyweights Reliance Industries and HDFC Bank after a surge in the previous session

The 30-share BSE benchmark Sensex plunged 802 points or 1.11% to settle at 71,140. The broader NSE Nifty declined 215 points or 0.99% to end at 21,522.

Meanwhile, the market capitalisation of all listed companies on BSE declined by Rs 1.84 lakh crore to Rs 375.36 lakh crore.

The highest weighted of the 13 major sectors — financial services — dropped 0.63%. Meanwhile, Nifty FMCG, IT, healthcare, consumer durables, and oil & gas also declined.

Bajaj Finance declined over 5% to hit a five-month low and was the top Sensex loser. The firm posted a smaller-than-expected rise in quarterly profit, while its asset quality deteriorated.

Fed policy decision

Nervousness was seen among investors in Monday’s trade ahead of the Fed policy decision on Wednesday.

Markets expect a 47% chance of a Fed rate cut in March, the CME FedWatch tool showed, down from 88% a month earlier. They currently anticipate 134 bps of cuts in the year, compared with 160 bps of easing a month ago.

“Investors exhibited a reversal in strategy, adopting a cautious approach in anticipation of the upcoming FOMC meeting and Interim Budget amid persistent concerns regarding elevated valuations and escalating tensions in the Middle East,” said Vinod Nair, Head of Research at Geojit Financial Services.

Oil rises above $82

Markets are edgy as tension escalated in the Middle East, keeping oil above $82 a barrel. The oil price rose after a drone attack killed three US troops in Jordan.

Brent crude futures rose 33 cents, or 0.4%, to $82.16 a barrel. US West Texas Intermediate crude was up 35 cents, or 0.46%, at $77.13 a barrel.

Profit booking in RIL and HDFC Bank

Markets were dragged on profit booking in index heavyweights Reliance Industries and HDFC Bank after a surge in the previous session.

Reliance Industries and HDFC Bank alone contributed about 336 points to Tuesday’s loss. Reliance Industries shares fell 2.8% on Tuesday, while HDFC Bank dropped about 0.8%.

Asian Markets

Asian stocks stumbled on Tuesday as the court-ordered liquidation of property giant China Evergrande weighed on sentiment while geopolitical tensions lifted oil prices and dented risk appetite ahead of the Federal Reserve’s meeting.

Hong Kong’s Hang Seng index shed 2.3%, with the mainland properties index down 3%. China stocks fell 1.8% and were on course for a 4% drop for the month.

Currency Watch

The Indian rupee ended little changed on Tuesday as local dollar appetite offset positive cues from strength in most Asian currencies. The rupee closed at 83.1050 against the US dollar, barely changed from its close at 83.1325 in the previous session.

In the currency market, the dollar index, which measures the US currency against six rivals, was steady at 103.51. The yield on 10-year Treasury notes extended its slide and was down 4 basis points to 4.051%.

(With inputs from agencies)

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