Snapping the four-session long gaining spree, the domestic markets ended lower on Wednesday as banking stocks declined on caution ahead of the unveiling of a new methodology for calculating lending rates, with broader sentiment also hit by continued worries about a US rate hike.
The S&P BSE Sensex settled the day at 26,117.85, down 51.56 points, while broader CNX Nifty ended below its crucial psychological level of 7,950. The 50-share index quoted 7,931.00, down 23.55 points at close.
Market breadth remained mixed with 16 of the 30 Sensex components ending the day in green.
State Bank of India was the worst-performer on Sensex and ended the day 1.8 per cent down as Reserve Bank of India Governor Raghuram Rajan said on Tuesday the central bank would soon announce a new methodology that will force them to set lending rates based on their marginal cost of funding.
The BSE BANKEX was the top sectoral loser and settled the day 1.03 per cent down at 19654.24.
Meanwhile, some software service exporters and auto firms such as TVS Motor fell as heavy flooding in the southern state of Tamil Nadu shut down factories and paralysed the airport.
Sentiment also took a hit as investors braced for the prospect of a US rate hike in December. Federal Reserve Chair Janet Yellen is due to hold public appearances over the next two days at a high-profile economics group and before a joint committee of Congress.
At the same time, investors also monitored progress in the current session of parliament as Prime Minister Narendra Modi's government seeks to pass its reform agenda, including a new goods and services tax.
"Markets are cautious on the key tax bill's fate in the ongoing parliament session and expectations of a rate hike by the Fed. Markets would leave all the worries if corporate earnings rebound though in coming quarters," said G Chokkalingam, founder of Equinomics, a research and fund advisory firm.
Among Asian markets, China's Shanghai Composite gained 2.33 per cent, while Hong Kong's Hang Seng ended with an uptick of 0.44 per cent. Japan's Nikkei dipped 0.37 per cent at close.
Overnight, US stocks moved notably higher as health and consumer shares bounced back while auto sales suggested upbeat growth in November. Dow Jones, S&P 500 and Nasdaq added up to over 1 per cent.
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Lowdown on markets today
Sensex at 26100.06, down 69 points
Nifty at 7926.55, down 28 points
Sensex at 26063.62, down 105 points
Nifty at 7917.10, down 39 points
Sensex at 26,077.62, down 91.79 points
Nifty at 7,921.60, down 33.30 points
Sensex at 26,207.70, up 38.29 points
Nifty at 7,963.30, up 8.20 points