The benchmark BSE Sensex recovered from the day's low but still ended lower by over 200 points as negative sentiment persisted across the globe after the Bank of Japan and the US Federal Reserve acknowledged concerns over Britain's likely exit from the European Union while keeping key policy rates steady.
The BOJ's action came after the US Federal Reserve left interest rates unchanged overnight as widely expected, while warning slower economic growth would crimp the pace of monetary policy tightening in future years. The US central bank still stuck to its plan to raise rates twice in 2016.
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The Sensex touched a high of 26,686.03 and low of 26,314.91.
Barring metal and PSU, all other BSE sectoral indices ended in the red. Among them, banking index fell the most by 1.38 per cent, capital goods 1.02 per cent, auto 0.92 per cent and infrastructure 0.82 per cent, while metal index was up 0.41 per cent and PSU 0.01 per cent.
Major Sensex losers were Maruti (-2.93%), Bharti Airtel (-1.65%), ICICI Bank (-1.54%), NTPC (-1.53%) and Hero MotoCorp (-1.39%), while the major gainers were Asian Paints (+1.13%), GAIL (+1.08%), Wipro (+0.59%), HUL (+0.56%) and Tata Motors (+0.4%).
“In short term, I expect volatility to continue,” said Abhishek Jain, head of research, KR Choksey Securities.
“Even in safe stocks, there is going to be impact of Brexit in many companies, as there is cross currency. People are looking at books and gains and buying at lower levels.”
European stocks fell while oil prices headed for a sixth session of declines on Thursday after the Bank of Japan refrained from taking further stimulus steps, hours after the Federal Reserve struck a cautious note on its policy outlook.
A report by SMC Global said: " Asian stocks turned lower on Thursday after the Federal Reserve's cautious policy stance, with Japanese equities hit hard by a strong yen and nervousness before a Bank of Japan policy decision later in the day. Overnight, US stocks relinquished modest gains and closed lower on Wednesday, stretching a losing streak to five days, as investors weighed the Federal Reserve's decision to delay rate increases. China's bank lending increased more than expected in May, figures from the People's Bank of China showed on Wednesday. Banks extended CNY 985.5 billion in new yuan loans in May, which was above the expected level of CNY 750 billion. Aggregate financing decreased to CNY 659.9 billion in May. Economists had forecast it to rise to CNY 1 trillion from CNY 751 billion in April."