The Indian equity benchmarks resumed their downward move after day's pause in the previous session mirroring losses in global markets after US Federal Reserve chairman signaled plans to steadily tighten interest rate cycle. The Sensex fell as much as 1,419 points and Nifty 50 index touched an intraday low of 16,866.75. However, buying in banking shares like State Bank of India, Axis Bank, Kotak Mahindra Bank, IndusInd Bank and ITC helped benchmarks recover most of their intraday losses.
The Sensex fell 581 points to close at 57,277 and Nifty 50 index dropped 168 points or 0.97 per cent to settle at 17,110.
In its latest policy update on Wednesday, the Fed indicated it is likely to raise U.S. interest rates in March, as has been widely expected, and reaffirmed plans to end its bond purchases that month before launching a significant reduction in its asset holdings, news agency Reuters reported.
Back home, ten of 15 sector gauges compiled by the National Stock Exchange ended lower led by the Nifty Information Technology index's over 3.5 per cent fall. Pharma, Consumer Durables, Healthcare, Real Estate, and FMCG indices also fell between 1.2-2.2 per cent.
On the other hand, index of state-run banking shares jumped over 5 per cent on hopes of fund infusion in the upcoming Union Budget which will be presented on February. Nifty Private Bank, Bank, Auto and Media shares also witnessed buying interest.
Among the individual shares, Canara Bank advanced as much as 8.65 per cent to Rs 240.55 after its net profit in December quarter more than doubled to Rs 1,502 crore versus Rs 696 crore during the same period last year.
HCL Technologies was top Nifty loser, the stock fell 4 per cent to close at Rs 1,080. Tech Mahindra, Dr Reddy's Labs, Tata Consultancy Services, Wipro, Divi's Labs, Titan, UPL, Hero MotoCorp, Nestle India and Infosys also fell between 2-3 per cent.
On the flipside, Axis Bank was top Nifty gainer, the stock advanced 3.3 per cent to end at Rs 777 after it reported better-than-expected December quarter earnings.
State Bank of India, Cipla, Maruti Suzuki, Kotak Mahindra Bank, Indian Oil, Tata Motors and IndusInd Bank also ended higher.
The overall market breadth was negative as 1,884 shares ended lower while 1,480 closed higher on the BSE.