Profit booking, coupled with heightened chances of a US rate hike and a weak rupee depressed the Indian equity markets during the mid - afternoon trade session on Wednesday.
Consequently, the barometer 30 - scrip sensitive index (Sensex) of the Bombay Stock Exchange (BSE) declined by 116 points or 0. 46 percent.
Similarly, the wider 50 - scrip Nifty of the National Stock Exchange (NSE) traded in the red. It dwindled by 31 points, or 0. 40 percent, at 7, 683. 80 points.
The Sensex, which opened at 25, 322. 10 points, traded at 25, 214. 29 points (at 1:15 p. m. ) - - down 116. 20 points or 0. 46 percent from the previous day's close at 25, 330. 49 points.
So far, during the intra - day trade, the Sensex has touched a high of 25, 322. 10 points and a low of 25, 156. 82 points.
The BSE market breadth slightly favoured the bears - - with 1, 261 declines and 1, 104 advances.
Initially, both the key indices of the Indian equity markets opened on a flat note, in sync with their Asian peers. Global markets have dipped after terror attacks struck Brussels on Tuesday.
Market analysts pointed out that profit booking dragged markets lower.
In addition, investors were seen hesitant to chase prices higher due to the heightened chances of a US rate hike next month.
A hike in the US interest rates is expected to lead away Foreign Portfolio Investors (FPIs) from emerging markets such as India.
Besides, a weak rupee and unwinding of long positions ahead of the derivatives expiry and the financial year end dampened sentiments.
The rupee opened at 66. 78 to a US dollar from its previous close of 66. 72 to a greenback. The rupee's weakness can be attributed to a strengthening of the US dollar.
The US dollar index has continued to strengthen for the fourth consecutive day on Wednesday, after the heightened potential of a US rate hike in April.
"Profit booking, weak rupee and negative sentiments after yesterday's terror attacks in Brussels has dented investors' sentiments. Investors are seen hesitant to chase prices higher due to the increased potential of a US rate hike in April, " Anand James, co - head, technical research desk with Geojit BNP Paribas Financial Services, told IANS.
Nitasha Shankar, senior vice president for research with YES Securities, elaborated that headline indices traded with slight weakness as they took cues from their Asian peers which were in the red.
"Moreover, volumes are thin in the current correction indicating a pause and consolidation before indices resumes their upward journey. Broader markets are also trading with minor weakness in line with the headline indices, " Shankar noted.
"All major indices barring the metal index are trading in the red. Bank, energy, IT and FMCG indices are dragging the most. Metal index is the lone gainer with gains of 1 percent. "
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