The Sensex and Nifty fell for a second consecutive session on Wednesday, reflecting the cautious sentiment in global markets after an influential US Federal Reserve official said interest rates could rise as soon as September.

New York Federal Reserve Bank President William Dudley said a rate hike in September was possible, while Atlanta Fed President Dennis Lockhart said the US economy is likely strong enough for at least one rate increase before the end of 2016, with two a possibility.

Besides, domestic sentiment was affected by the discouraging macroeconomic data as wholesale inflation soared to a 23-month high of 3.55 per cent in July, making investors trim their positions.

The BSE index ended lower by 59.24 points or 0.21 per cent at 28,005.37, after rising as much as 0.39 per cent earlier in the session.

The broader NSE index was down 18.5 points or 0.21 per cent at 8,624.05.

Among BSE sectoral indices, metal index gained the most by 2.06 per cent, auto 0.84 per cent, PSU 0.78 per cent and healthcare 0.52 per cent. On the other hand, IT index was down 1.67 per cent, TECk 1.35 per cent, FMCG 0.31 per cent and oil & gas 0.25 per cent.

Top five Sensex gainers were Tata Steel (+3.2%), Coal India (+2.9%), Bajaj Auto (+1.99%), Hero MotoCorp (+1.98%) and Axis Bank (+1.14%), while the major losers were TCS (-2.51%), Adani Ports (-2.34%), Power Grid (-1.69%), Infosys (-1.67%) and Asian Paints (-1.41%).

IT exporters continued to drag the indices down, while the banking and auto sectors edged up.

Infosys Ltd fell over 1.60 per cent after closing one percent down on Tuesday after Royal Bank of Scotland cancelled its contract with the IT company to provide services to a U.K. unit.

Tata Consultancy Services was down 2.51 per cent after falling 1.7 per cent on Tuesday.

Shares of InterGlobe Aviation , owner of budget carrier IndiGo, gained as much as 3.82 per cent after Citi upgraded the stock to “buy” from “neutral", adding that A320 delivery concerns were unwarranted.

Piramal Enterprises rose 4.68 per cent to a record high after it had said on Tuesday its US unit would buy contract drug maker Ash Stevens Inc.

Rally paused

A recent rally in Indian shares has paused as investors see a lack of new triggers. The NSE index is down 0.4 per cent since hitting a 15-1/2 month high on August 9.

“Global cues are mixed to negative. With that in the backdrop and absence of major domestic cues, markets have remained volatile,” said Anand James, chief market strategist, Geojit BNP Paribas Financial Services.

“Markets have not decided a direction as yet but it is not a thematic move; more of value-based buying that is supporting prices on the low side.”

A report by SMC Global said: "Asian stocks rose as the yen steadied after breaking through 100 against the dollar and investors weighed the prospects for higher rates this year. US stocks closed lower Tuesday, with telecommunications lagging, as investors awaited the release of the minutes from the Federal Reserve's July meeting.Output at the nation's mines, utilities and factories rose more than expected in July, according new government data released on Tuesday. A strong showing from each of the major industries contributed to the overall gain. A report from the US Federal Reserve showed that industrial production rose by 0.7 per cent in July. This followed a revised 0.4 per cent increase for the previous month. Economists had expected the measure to rise by 0.3 per cent. July's increase was the biggest advance of 2016."

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