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Indian shares snapped two sessions of gains on Wednesday, tracking lower global markets after data showed rising US inflation and on comments from Fed officials rekindled prospects of an interest rate hike as early as June.
The 30-share barometer declined 69 points, or 0.27 per cent to 25,704.61, with auto, TECk, IT and banking sector stocks leading the fall.
Among them, auto index fell the most by 1.28 per cent, TECk 0.31 per cent and IT 0.14 per cent. On the other hand, realty index rose 2.11 per cent, capital goods 0.64 per cent and metal 0.61 per cent.
The NSE Nifty also finished lower by 0.26 per cent or 20.60 points at 7,870.15.
Top five Sensex gainers were ONGC (+1.83%), SBI (+1.78%), Lupin (+1.5%), L&T (+1.24%) and ITC (+0.76%), while the major losers were Bajaj Auto (-1.8%), M&M (-1.5%), Hero MotoCorp (-1.47%), Tata Motors (-1.2%) and BHEL (-1.16%).
Brokers said besides profit-booking in recent gains, a weak trend in global markets tracking overnight losses in the US after strong inflation data that fuelled talk of an interest rate hike, dampened the sentiment here.
Asian shares sagged after comments from Atlanta Fed President Dennis Lockhart - seen as a policy centrist - on Tuesday predicted there will be two or three rate hikes, a view echoed by San Francisco Fed President John Williams.
Compounding these concerns, US consumer prices recorded their biggest increase in more than three years in April as gasoline prices and home rents rose.
“Yesterday's comments from Lockhard and Williams indicate that the Fed is uncomfortable with the low probability markets are assigning to a June rate hike. This will begin to weigh down on markets whenever they head higher,” said Varun Khandelwal, Director, Bullero Capital in Delhi.
Asian shares weakened on Wednesday in the wake of accelerating US inflation and comments from Federal Reserve officials that rekindled prospects of an interest rate rise as early as June.
MSCI’s broadest index of Asia-Pacific shares outside Japan lost 0.8 per cent.
Wall Street sold off on Tuesday as investors boosted their bets on the Federal Reserve raising rates later this year, while Home Depot dragged on indexes following its quarterly report.
A report by SMC Global said: "In overseas markets, Asian stocks fell for the first time in three days as better-than-expected data in the US and Japan fuelled speculation their central bank policies will be less accommodative than was previously envisaged. The yen and the dollar strengthened against other major peers. US stocks fell Tuesday as investors fretted about the prospect of higher interest rates. A handful of upbeat economic data releases and comments from Federal Reserve officials increased investors' expectations that rates will rise this year.Japan's gross domestic product expanded 0.4 percent on quarter in the first quarter of 2016, the Cabinet Office said. That topped forecasts for an increase of 0.1 per cent following the downwardly revised 0.4 per cent contraction in the previous three months (originally -0.3 per cent)."
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