Sensex closes 150 points down as investors remain wary of US rate hike

Despite strong macro-economic data, investors remained cautious ahead of the upcoming decision of US Fed on rate hike, leading to a barometer index of the Indian equities slipping 150 points down at close on Tuesday.

Investors were amply cautious ahead of the upcoming decision by the US Fed on raising or otherwise of US interest rates.

Even the better-than-expected inflation and modest factory output data, which had cheered investors with hopes of a rate cut by the Reserve Bank of India, did not support buying in the markets.

The barometer 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange (BSE) had gained 246.49 points or 0.96 percent on Monday after inflation data points such as wholesale price index (WPI) and consumer price index (CPI) were released.

On Tuesday, the S&P BSE Sensex, which opened at 25,908.34 points, closed at 25,705.93 points - down 150.77 points or 0.58 per cent from Monday's close at 25,856.70 points.

The wider 50-scrip Nifty of the National Stock Exchange (NSE) fell by 43.15 points or 0.55 per cent at 7,829.10 points at close.

"Despite the healthy inflation and factory output data and hopes of a rate cut by the apex bank, investors seemed reluctance to chase prices," Anand James, co-head, technical research desk with Geojit BNP Paribas Financial Services, told IANS.

India's annual inflation rate based on wholesale prices continued in the negative territory in August, falling to (-)4.95 per cent from (-)4.05 per cent in July.

Another key macro indicator showed that India's factory output had grown by 4.2 per cent in July against a marginal rise of 0.9 per cent in the like month of last year.

Consumer price inflation for August eased slightly to 3.66 per cent from 3.69 per cent in July and a staggering 7.03 per cent during the like month of last year.

India Inc. expects that a better-than-expected WPI and CPI will drastically improve chances of a rate cut during RBI's monetary policy review slated for September 29.

"The investors' reluctance to chase higher prices is emanating out of the caution prevailing due to the upcoming US Fed's Federal Open Market Committee (FOMC) meet on September 16-17," James said.

The US Fed will decide during the FOMC meet, whether or not to raise interest rates.