The benchmark Sensex closed at 62,917 points, with a decline of 311 points, or 0.5 per cent while the Nifty50 fell 68 points, or 0.3 per cent, to end the session at 18,688 points.
The Fed officials paused for the first time on Wednesday after 15 months of interest-rate hikes. However, they also sent out an unambiguous message of resuming tightening at some point to tame inflation. The hawkish stance dampened investor mood. The officials further changed the language in their statement, referring to how they would determine ‘the extent of additional policy firming that may be appropriate’ instead of ‘the extent to which additional policy firming may be appropriate.’
In his post-meeting statement, the Fed chief Jerome Powell said that inflation pressures continue to run high, and it will take a while before inflation could be brought under the central bank’s target of 2 per cent.
Hitesh Jain, lead analyst, institutional equities, Yes Securities, said that Fed could deliver one more 25-basis point hike in July and that would be the terminal rate (5.5 per cent).
Meanwhile, Chinese retail sales and industrial production disappointed investors, rising 12.7 per cent and 3.5 per cent, respectively, year on year in May — from 18.4 per cent and 5.6 per cent in April. Moreover, youth unemployment hit 20.8 per cent, the highest since the records began in 2018.
Close to two-thirds of Sensex stocks declined. ICICI Bank fell 1.5 per cent and contributed the most to Sensex’s decline, followed by HDFC Bank, which declined 1.3 per cent.
FPIs were net buyers to the tune of Rs 3,085 crore. Market observers said the large inflow tally was on account of a block trade in Axis Bank.