The S&P BSE Sensex ended the day at 28,226, up 85 points, while the Nifty50 settled at 8,734, up 18 points.
Increased demand from oil importers for the American currency and a weak opening in the domestic stock market also put pressure on the rupee.
Nifty saw the biggest weekly gain since the first week of September and comfortably maintained its crucial 8250 levels in today's session
In worldwide trade, the US dollar continued its highly bullish trend against all major emerging market currencies
The breadth, indicating strength of the market was strong
The Fed's decision on tapering its monthly $85 billion bond-buying programme is expected later on Wednesday.
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Steps announced by new RBI Governor Raghuram Rajan could attract $10 billion of forex inflows in the next three months and this could be a material near-term positive for the rupee, which has lost 20 per cent since January, the London-based banking and financial services company said.
On the sectoral map, consumer durables stayed in the lead by surging 2.39 per cent, followed by realty index, oil and gas and infra.
Heavy unwinding by foreign portfolio investors and lacklustre equities dampened the sentiment
Some investors had speculated that the US central bank might put its plans on hold given the jitters overseas.
Strong currency and sagging oil prices are spooking policymakers.
The broader NSE Nifty too fell below the 10,100 level by dropping 100.10 points to end at 10,094.25
Bullish dollar sentiment overseas alongside sluggish domestic equity market predominantly impacted the domestic currency
However, FII outflows of Rs 545 crore (Rs 5.45 billion) capped the gains in the rupee, which had slumped by 126 paise in past two days.
The rupee is expected to become more jittery and choppy in the near-term
The Rupee is expected to weaken further against the dollar.
Covering-up of short positions ahead of Thursday's expiry of August series in the derivatives segment gave equities a slight push
Of the 30-share Sensex pack, 15 today closed in the red
The NSE 50-share Nifty spurted 97.25 points, or 0.92 per cent, to 10,715.50
It is the rupee's biggest single-day gain this year.
It is surprising that central bankers around the world have cautioned the US Federal Reserve against raising rates.
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The partially convertible rupee closed at 63.37/38 per dollar compared with 62.83/84 on Monday. The unit dropped 0.85 per cent on the day, its biggest single-day fall in two weeks.
The decline was led by index heavyweight Reliance Industries along with ITC and HDFC.
Tata Motors (down 1.7%) was the top loser on Sensex and Nifty, while Lupin (1.6%) gained the most.
Shares of L&T Technology Services, an arm of engineering giant Larsen and Toubro, made a decent debut on the bourses
Of the 30-share Sensex, 13 ended higher, while 17 led by Power Grid, Tata Steel, Bajaj Auto, Hero MotoCorp, NTPC, Tata Motors, Dr Reddy's, M&M, GAIL, Infosys and L&T finished lower, fell by up to 2.40 per cent
Financials were the top gainers lead by private lenders ICICI Bank and HDFC Bank
The view among the regulator and the government is that the currency is overvalued
Hawkish guidance by the US Fed raises concerns it could tie the hands of RBI from trimming rates.
According to market experts, GST Bill, movement of the rupee and uncertain global cues amid expected rate cut by the US Fed will dictate the movement of the markets.
The latest macro-data from India is disquieting
The 30-share Sensex ended in the red.
Fed seen holding rates steady as investor confidence shakes
ONGC was the top performer while private banking major ICICI Bank extended gains
The Reserve Bank of India held its policy rate at 7.25 percent on Tuesday.
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As many as nine respondents said RBI would hold the repo rate at 8% till March-end, 2015
In a recent report, BofA-ML suggests investors to track these six event risks in July apart from the Greek drama
Sensex ends in green, bluechips in spotlight.
Investors turned cautious ahead of the US Fed meet outcome later today and July F&O expiry.
If the Fed hikes policy rates for the dollar, that will probably mean a move into US Treasuries for speculators.
