The Sensex and the Nifty fell for a second consecutive session on Thursday, retreating from earlier gains of as much as 1.2 per cent as investors felt domestic markets already sufficiently reflect expectations for a later start in US rate rises.
Most global markets rallied towards all-time highs after the Federal Reserve signalled it was in no rush to push borrowing costs higher despite removing a reference to being "patient" on interest rates from its policy statement on Wednesday.
In India, however, shares had already risen to record highs earlier this month but have retreated amid concerns about a lack of triggers.
The Sensex ended lower by 152.45 points or 0.53 per cent at 28,469.67 and the Nifty fell 51.25 points or 0.59 per cent at 8,634.65.
Among BSE sectoral indices, banking index fell the most by 1.76 per cent, followed by realty 1.5 per cent, capital goods 1.00 per cent and oil & gas 0.68 per cent. On the other hand, consumer durables index was up 0.48 per cent and healthcare 0.42 per cent.
Top five Sensex gainers were GAIL 2.19%, NTPC 1.5%, Tata Steel 1.36%, TCS 1.32% and ONGC 0.95%, while the major losers were Axis Bank 2.5%, SBIN 1.76%, Reliance 1.44%, SSLT 1.37% and ICICI Bank 1.33%.
Global markets rose back towards all-time highs and a slump then jump in the dollar triggered wild moves in currency markets on Thursday, as investors priced in a later start and a slower pace for future US rate rises.
European shares opened up 0.4 per cent with London's FTSE hitting a new record peak after Asian bourses had enjoyed their best session in 18 months overnight.
MSCI's broadest index of Asia-Pacific shares outside Japan climbed 1.6 per cent, its largest daily gain since September 2013. Australia's main index jumped 1.9 per cent led by banks as markets wagered on lower domestic rates.
The only laggard was the Nikkei which slipped 0.2 per cent in reaction to a firmer yen.
#USFed 's new inclusion of "export growth has weakened" needs more attention than it removing "patient" from its statement. Shouldn't be?
— Gurumurthy K (@gurukmurthy)
March 19, 2015The US Federal Open Market Committee (FOMC) has kept the federal funds rate unchanged (between 0 and 0.25 per cent).
The Federal Reserve on Wednesday had moved a step closer to hiking rates for the first time since 2006, but downgraded its economic growth and inflation projections, signaling it is in no rush to push borrowing costs to more normal levels.