New Delhi, Jan 27 : The US Fed's decision to stick to its plans of tightening monetary policy in March spooked investors and plunged India's key equities indices on Thursday.
Accordingly, Sensex settled at 57,276 points, down 1 per cent or 581 points from its previous close, whereas Nifty settled at 17,110 points, down 1 per cent or 167 points from its previous close.
The fall came as FIIs sold Rs 6,266.75 crore on BSE, NSE and MSEI in the capital market segment.
In its meeting on Wednesday, the Federal Open Market Committee kept its policy interest rate "near zero" and stated its expectation that an increase in this rate would "soon be appropriate".
Notably, a rate hike by the US Federal Reserve can potentially drive away more FII money from India and other emerging markets.
On Thursday, volumes on the NSE were higher than recent averages.
Among sectors, banking and auto indices gained the most while realty, consumer durables, telecom, IT and healthcare fell the most.
Globally, Asian shares slumped to their lowest in nearly 15 months while European stocks were in recovery mode post a weak opening.
"The fall in the Indian markets is in line with the global markets. The markets were eagerly awaiting the outcome of the US Federal Reserve meeting on monetary policy, which was held on January 25-26," said Sameer Kaul, MD and CEO, TrustPlutus Wealth.
"The combination of these measures is what has spooked the markets globally as it would mean moving from a scenario of easy and excess liquidity to a scenario of liquidity tightening," Kaul added.
He also suggested investors to stick to their asset allocation and invest in high-quality companies and pay close attention to valuations.
Nifty IT, pharma, realty and consumer durables slumped the most on Thursday, while PSU bank jumped sharply.
On the stock-specific front, HCL Technologies, Tech Mahindra, Dr Reddy's, TCS, and Wipro were the top five losers, declining 3.9 per cent, 3.6 per cent, 3.4 per cent, 3.1 per cent and 3.1 per cent, respectively.
Axis Bank, SBI, Cipla, Maruti Suzuki, and Kotak Mahindra, on the contrary, were the top five gainers during the session.
"As FPIs continued to book profits from Indian equities, value stocks made a comeback with the PSU Bank Index rallying over 5 per cent in afternoon trade on Thursday, well supported by auto stocks to stage a smart recovery," said S. Ranganathan, Head of Research at LKP securities.
"As IT and pharma stocks witnessed profit taking, textile stocks were sought after in the broader market on the back of earnings," Ranganathan added.