Indian stock markets declined for the fourth straight session on Wednesday, with Nifty falling below its psychological 5400 level, as the rupee plunged to a new record low against the US Dollar.
The benchmark BSE Sensex declined 1.51 percent, or 275.15 points, to 17,970.89. The 50-share NSE Nifty plunged 1.83 percent, or 98.90 points, to 5,302.55.
Markets opened on a positive note after plunging more than 6 percent in the last three sessions. Banking sector shares rallied in early trade after Reserve Bank of India (RBI) eased cash and bond holding rules for banks overnight. The Indian central bank on late Tuesday relaxed rules on mandatory bond holdings for banks, which will help protect lenders from large mark-to-market losses.
However, markets pared earlier gains and entered into negative territory by late afternoon as the rupee plunged to a new record low against the dollar ahead of the release of minutes from the Federal Open Market Committee’s (FOMC) July policy meeting later today.
The rupee plunged to a new record low of 64.45 against the dollar, breaching its earlier all time low of 64.13 recorded in the previous session, before the release of Fed’s July policy meeting minutes, which could provide hints about the timing of the planned reduction of US central bank stimulus.
"The minutes should continue to reinforce this theme of tapering at the September meeting as long as the labour market holds up. Along with that theme, they should also repeat another tune dear to FOMC hearts, 'tapering is not tightening,” Michelle Girard chief U.S. economist at RBS, told Reuters.
All the 13 BSE sectoral indices, realty sector plunged 4.04 percent and metal sector declined 3.68 percent. Banking sector advanced 1.24 percent and consumer durables sector gained 0.94 percent.
The overall market breadth is negative with 926 advanced against 1339 declines on the BSE.
Meanwhile, Asian stock markets ended mixed as investors opted for caution before Fed minutes. Japan's benchmark Nikkei 225 gained 0.21 percent and China's Shanghai Composite rose 0.02 percent, while Hong Kong's Hang Seng declined 0.69 percent and South Korea's KOSPI fell 1.08 percent.