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BSE Sensex and NSE Nifty 50 ended half a per cent down on Wednesday, as investors booked profit ahead of the US Federal Reserve’s monetary policy outcome, which is due later tonight. BSE Sensex fell 263 points or 0.4 per cent to 59,457, while NSE Nifty 50 ended 98 points or 0.6 per cent down at 17718. Index heavyweights such as Housing Development Finance Corporation, L&T, Infosys, Tata Consultancy Services, and Kotak Mahindra Bank, among others, dragged the index the most. Broader markets underperformed equity frontliners. S&P BSE Midcap index fell 0.6 per cent or 162 points to settle at 25,778, while S&P BSE SmallCap index ended 204 points or 0.7 per cent down at 29,239. Sectorally, Bank Nifty index fell 0.6 per cent to settle at 41,203.45, India VIX, the volatility index, gained 2.8 per cent to settle at 19.33 levels.

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Markets across the globe were trading with considerable volatility ahead of the Fed policy announcement. A 75bps hike by FED was factored in by the markets, while reports of mobilising Russian forces in Ukraine has escalated geopolitical tension and fears of rising inflation. Any military escalation will have a significant effect on the world & domestic economy. This will have an influence on the near-term trend of the global market and implications on the local market can be high as it is trading at premium prices compared to the world.

Ajit Mishra, VP – Research, Religare Broking

Markets traded volatile for yet another session and lost over half a percent. After the initial positivity, the Nifty index pared all its gains as the session progressed and finally settled at 17718.35; down by 0.5%. Barring FMCG and media,most of the sectoral indices traded in tandem with the benchmark and ended lower. Markets will first react to the Fed meet outcome in early trades on Thursday. Besides, the scheduled weekly expiry would add to the volatility. Amid all, indications are in the favour of further consolidation so we suggest traders to stay light and focus more on the risk management part. On the index front, 17,400-17,500 zone would act as a cushion in Nifty while rebound towards 17,900-18,000 zone may attract selling pressure.

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Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services

Domestic market consolidated ahead of the FOMC outcome expected late on Wednesday. Markets will react to the Fed’s interest rate hike decision while the 75 bps have been factored in, an aggressive commentary or sharper rate hike of 100bps could lead to higher volatility and pressure on the market. An inline rate hike can bring relief to the market. Stock specific action was seen in sectors like defence, FMCG, capital goods and Healthcare. Indian equities witnessed volatility amid weak global cues. Nifty opened with minor cuts and remained under pressure throughout the day to close with loss of 98 points at 17719 levels. India VIX was up by 3.4% at 19.4 levels. Except for FMCG, all other sectors ended in the red.

Sahaj Agrawal, Head of Research – Derivatives, Kotak Securities

Nifty has been in a corrective phase since the last few trading sessions. We have not seen a short term reversal attempt succeeding and hence maintain a negative bias for the near term. Monthly support is only seen at 17000. US Fed comments are expected to keep volatility high in the near term. Expect consolidation to correct in the near term as the broader market sentiment has also turned negative. FII and PRO positions also suggest reduction in net shorts suggesting limited downside in near term. For Nifty, maximum OI buildup is seen at 17000 Put and 18000 Call Option. For Bank-Nifty, maximum OI buildup is seen at 40500/41000 put and 41500/42000 call options. For the expiry day, expect nifty to trade with resistance of 17950 – any move above the same can invite short covering.

Kunal Shah, Senior Technical Analyst, LKP Securities

The Bank Nifty index continued to face resistance at a higher level where 42,000 will act as a hurdle. The index is stuck in a broad range between 40,500-42,000 and a break on either side will decide the trend for the index. On the derivative front, the highest open interest on the call side is built up at 42,000 and immediate support is visible at 41,000 where fresh put writing has been observed.