Sensex cracks over 600 pts, Nifty ends below 18,050: Here are five factors that impacted D-Street today

Indian equity benchmarks Sensex and Nifty50 fell around one per cent on Wednesday, snapping a two-day winning run, as caution persisted among investors globally ahead of minutes of the Fed's last policy review due later in the day. Selling pressure in heavyweights such as HDFC Bank and Reliance pulled the headline indices lower.

The minutes may offer what's in store in terms of interest rates in the world's largest economy at a time when central banks around the globe have the Herculean task of balancing red-hot inflation with growth.

The Sensex lost 636.8 points to settle at 60,657.5 and the Nifty shed 189.6 points to end at 18,043.

Investors lost Rs 2.9 lakh crore in wealth on Wednesday as the market capitalisation of BSE-listed companies reduced to Rs 281.7 lakh crore, according to exchange data.

Broader markets followed the headline indices lower, with the Nifty Midcap 100 and Nifty Smallcap 100 gauges falling around one per cent each.

A total of 43 stocks in the Nifty50 basket finished lower. Metal stocks such as JSW Steel, Hindalco and Tata Steel were among the top losers along with PSU counters like Coal India and ONGC. 

Divi's Labs, Maruti Suzuki and HDFC Life, surging between 0.4 percent and 1.1 per cent, were among the top gainers.

Here are five key factors that impacted Dalal Street on Wednesday:

Weakness on Wall Street and mixed moves in Asia

Wall Street's three main indices entered 2023 weaker amid session pressure in Tesla and Apple. The S&P 500 fell 0.4 per cent and the tech stocks-heavy Nasdaq Composite dropped 0.8 per cent, though the Dow Jones managed to finish barely in the red.

Equities across Asia saw mixed moves, with Japan’s Nikkei finishing almost 1.5 per cent lower. Hong Kong’s Hang Seng, South Korea’s Kospi and China’s Shanghai managed to close marginally higher.

Sustained FII outflows

Persistent offloading of shares by foreign institutional investors weighed on the Indian market. As of Wednesday, FIIs have net sold Indian shares to the tune of Rs 9,929.9 crore in nine straight sessions, according to provisional exchange data.

However, domestic institutional investors have net purchased shares worth Rs 10,328.9 crore during this period.

Rising dollar

The US dollar firmed up taking cues from expectations of more policy tightening going forward as investors awaited the minutes of the FOMC's December meeting. The dollar index, which gauges the greenback against six peers, rose 0.9 per cent to 104.64 on Tuesday. Similar to gold, investors globally often rush to the dollar for safety amid periods of financial uncertainty.

Strength in the dollar puts pressure on emerging market peers such as the rupee, which slipped past the 83 mark against the US currency last year.

Fears of too much tightening of monetary policies by central banks in their battle against inflation the consequent India meets the lion's share of its oil requirement through imports.

Rising COVID cases in China

Investors are fretting over the rising COVID cases in China, which they fear might cause a potential slowdown in the country and even impact the rest of the world.

Valuations

Though the Indian market has retreated about 4.5 percent from an all-time high in December, many experts believe equity valuations are still frothy.