Nifty Hits New High, but Closes in Red Ahead of Fed Meet

India's benchmark indices seesawed to a weak close on Tuesday as gave up early gains in a sharp selloff in the last hour of trading. The hit an all-time during the session but could not sustain the bullish momentum with traders cutting their bets ahead of the US Federal Reserve's policy meeting on Wednesday. India's stock will be shut on Wednesday for Maharashtra Day.

NSE's Nifty closed at 22,604.85 on Tuesday, down 38.55 points, or 0.17%, after making a fresh lifetime high of 22,783.35 during the day. BSE's Sensex declined 188.5 points, or 0.25%, to end at 74,482.78. The index's Tuesday high of 75,111.39 was 13 points short of its all-time high. Both indices had risen as much as 0.6% during the session.

"Investors appear to have lightened their positions ahead of the US FOMC (Federal Open Market Committee) meeting this week," said Aamar Deo Singh, Sr. vice president of research at Angel One. "Further, today being Bank Nifty weekly expiry, added to the selloff."

The is expected to keep interest rates unchanged on Wednesday but investors are more keen to get insights into when the US central bank would start easing rates in the face of stubborn inflation.

The Volatility Index, or VIX, rose 5.2% to 12.87 on Tuesday after gaining 12% the previous day when the Sensex and Nifty surged 1% each, suggesting traders see near-term risks to the market.

Despite the caution, the market is expected to hit new records soon.

"We saw some profit booking soon after Nifty tested new lifetime highs but we do not see this as negative for the markets," said Dharmesh Shah, head of technicals at ICICI Securities.

He expects the Nifty to surpass 22,800 in the short term and touch 23,400 levels by June after the election outcome.

On Tuesday, the Nifty Midcap 150 gained 0.24% and the Nifty Smallcap 250 was flat at close.

Shah said that investors should look for good quality stocks in large, mid, and small caps and buy on any dips.

Elsewhere in Asia, China declined 0.26%, Hong Kong remained flat, and Taiwan dropped 0.48%. South Korea gained 0.17%.

Foreign portfolio investors net bought shares worth ₹1,071.93 crore. Domestic institutions too were buyers to the tune of ₹1,429.11 crore.

Source: Stocks-Markets-Economic Times