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Both Sensex and Nifty snapped their four-day winning streak on account of profit taking in heavyweight banking and capital goods stocks.
Weakness in heavyweight banking shares was instrumental in pulling benchmarks- Sensex and Nifty lower.
Larsen & Toubro, State Bank of India, Axis Bank, ICICI Bank and HDFC Bank collectively pulled the benchmark Sensex 93 points lower.
A fall in rupee for a second straight day helped beaten down IT shares recoup some of their losses amid investors' frenzy to dump software stocks in favour of cyclicals such as banks and capital goods on hopes of a turnaround in the economy after pro-business BJP party was elected to power.
Infosys, TCS and HCL Technologies ended 1-2% higher due to weakness in rupee, after falling significantly on Monday when rupee touched its 11-month high levels.
On Tuesday, the rupee closed marginally weak at 58.64/dollar, compared with 58.6/dollar on Monday.
The rupee weakened on due to dollar buying by state-run banks, on behalf of RBI.
Besides, dollar demand from oil marketing companies was also seen.
It is currently trading at 58.78-a-dollar.
A depreciating rupee augurs well for IT companies as over 80% of their revenues come from exports to the US.
The 30-share Sensex shed 79 points at 24,298 and the 50-share Nifty slipped 23 points to 7,253 levels.
Other Sensex losers include, Bharti Airtel, Sun Pharma, Tata Motors and BHEL.
Sun Pharma slipped 1.7% after the US drug regulator- USFDA -said on Tuesday that the company’s response to a U.S. import ban on one of its plants lacked sufficient corrective measures.
Essar group shares surged on speculation of delisting of group companies from the bourses; Essar Oil, Essar shipping and Essar ports surged 15-17% higher on Wednesday.
Among BSE sectoral indices, BSE Bankex and capital goods fell over 1-1.6%, heading for a second day of falls on profit-taking after making a record closing high on Monday. Realty was the top gainers among sectors.
Asian shares slipped on Wednesday tracking the weakness on Wall-Street. Japan's Nikkei stock average slipped 0.2% lower, as investors waited for post-meeting comments by Bank of Japan (BOJ) Governor.
The BOJ expectedly kept policy rates unchanged and maintained its overall upbeat economic assessment while raising its capex view.
MSCI's broadest index of Asia-Pacific shares outside Japan slipped 0.1%, after US stocks fell in a broad selloff.
Back home broader markets continued to rally despite the weakness in benchmarks; BSE mid-cap and small-cap indices edged 1.3-1.8% higher.
Market breath on the BSE remained firm as 2081 stocks advanced against a decline see in 883 stocks.