The Indian stock market had a highly unpredictable session on Wednesday as Nifty 50 index rose to a new record high and then lost those gains as investors are waiting for the outcome of the U. S. Federal Reserve policy meeting. The Nifty rose to a record level of 25,482 points in early trade but then lost ground to trade in the red. Likewise, S&P BSE Sensex touched a fresh high of 85,109 and then plunged below 83,000.

The first round of exuberance was due to favourable global signals and favourable domestic macroeconomic indicators. However, profit-booking in IT stocks due to its high level and also due to caution emerged prior to the Federal Reserve’s interest rate decision reversed the market sentiment. Nifty IT came out as the worst performer, down by more than 3% as traders and investors chose to book profits after the sector delivered a stellar performance.

The marketing experts have considered day volatility as brought about by global issues and domestic investors’ realigning their portfolios. On the US front, the U. S. Federal Reserve is likely to announce its policy decision later in the day and market will look for direction on future course of interest rates. The Fed is expected to leave its interest rates unchanged, but investors will be focusing on the central bank’s guidance on interest rate cuts in the year 2025.

In the broader market, there was selling pressure in mid and small-cap stocks as compared to large-cap stocks. This trend is attributable to emerging worries that valuations in the smaller segments of the market have been rallying in the recent period. However, the banking sector was able to hold its ground and the Nifty Bank index was trading higher than the overall index.

In the IT space major players such as TCS, Infosys and HCL Technologies were among the major losers that pulled down the sector. Some of the IT stocks were sold due to information that Accenture, a global IT services firm, intends to defer the promotion of its employees by half a year as a result of tough operating environment.

This development has led to concerns on the medium-term prospects of the Indian IT industry which generates a large portion of its revenues from international markets.

On the bright side, selective auto and consumer goods stocks were on the buying list where Maruti Suzuki and HUL were the biggest gainer of the day. This means that the investors have been selective in their investments depending on the performance of the various sectors.

The Indian equity market has seen foreign institutional investors (FIIs) as net buyers in the recent trading sessions which has lifted the overall market. While the foreign investors have been net buyers domestic institutional investors (DIIs) have been net sellers suggesting that local players are not entirely bullish about the market.

While the market is in this phase of uncertainty, the best advice that analysts give to investors is to have moderation. The medium to long-term outlook for the Indian economy appears to be favourable, albeit with short-term fluctuations which are expected due to macroeconomic factors and overvaluation in some segments.

The attention is now turning to the Fed’s policy decision and the accompanying commentary, which may determine global equity markets in the next week or two. They are also focusing on factors that are going to affect the domestic environment including the coming festive season demand and progress of monsoon which plays an important role in the rural demand and thereby the growth of economy.