Benchmark indices ended lower, amid weak Asian cues and easing crude oil prices, as investors turned cautious ahead of the policy meetings of central banks in Japan and the US.
"The more compelling case for a rate hike, in our opinion, would stem from the Fed’s need to regain credibility and ensure that its communication does move the markets. We continue to stand by our case for a rate hike of 25 bps in the Fed Funds rate in December," adds Abheek Barua, Chief Economist, HDFC Bank.
The S&P BSE Sensex shed 111 points to close at 28,523 and the Nifty50 dropped 33 points to finish at 8,776. Broader markets ended marginally lower- BSE Midcap and the Smallcap index fell 0.1%-0.3%.
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Barua further adds, "The most likely outcome in our view is the expansion of pool of assets (including local government bonds etc.) and a cut in interest rate for the loan support program. Moreover, to impart longevity to the asset purchase program, there could be change in the inflation forecast, that is expected timing for the achievement of 2% inflation could be changed from “during fiscal 2017” to “over medium term”.
Asian shares edged lower on Tuesday as investors nervously awaited the outcomes of Federal Reserve and Bank of Japan policy meetings that will both conclude on Wednesday.
MSCI's broadest index of Asia-Pacific shares outside Japan slipped 0.1%. Japan's Nikkei stock index erased earlier gains and shed 0.2%, as trading resumed after a public holiday on Monday.
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Tokyo markets will be closed for another holiday on Thursday, with the highly-anticipated BOJ meeting sandwiched in between the market closures.
Oil prices edged lower on Tuesday ahead of an expected build in US crude oil stocks and on Venezuelan comments that the oil market remains oversupplied by 10%.
Back home, India’s external debt stood at $485.6 billion as of March 2016, up 2.2% year-on-year due to a rise in long-term debt, particularly non-resident Indian (NRI) deposits.
Among key stocks, Hero MototCorp, Bajaj Auto, Bharti Airtel, Adani Ports and Infosys slipped between 1%-2.5%.
Mobile operators, including Bharti Airtel, Vodafone and Reliance Jio, have submitted call traffic data to Trai, a move that will enable the regulator to look at the pattern, including asymmetric traffic on networks, as part of its consultation on inter-connection usage charges. Shares of Bharti Airtel slipped by 1%.
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On the gaining side, ONGC, Tata Steel, Lupin, Maruti Suzuki and Power Grid gained between 0.6%-1.5%.
Oil and Natural Gas Corporation (ONGC) moved higher to its 11-month high of Rs 259, up 2% on the BSE, extending its 2% gain in the past two trading sessions.
Tata Steel will pay out a total Rs 130 crore as annual bonus to its eligible employees for the year 2015-16.
Among other shares, Bhageria Industries hit a new high of Rs 535 in intra-day trade, ended up 10% on the BSE, extending its past over a month rally, after reporting a good set of numbers for the quarter ended June 30, 2016 (Q1FY17) and sub division of the company’s equity shares.
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Kolte-Patil Developers moved higher by 7% on the BSE after the real estate company said that it expects to record 20% year-on-year growth in volume for the rest of the current fiscal (2016-17).
Jubilant FoodWorks slipped 6% on the BSE after the company announced that Ajay Kaul, Chief Executive Officer (CEO) cum Wholetime Director of the company resigned.
Castrol India rallied 8.5% after a more than 1% stake changed hands in the counter post multiple block deals on the NSE and Bombay Stock Exchange.
With Reuters inputs