Indian equity benchmarks ended the lackluster day of trade with marginal losses, as traders opted to book some of their profits after yesterday's rally. Frontline gauges swung between green and red throughout the day, as traders remained cautious ahead of the US Federal Reserve's rate decision. The Fed is almost universally expected to raise its benchmark interest rates, but investors are keen on seeing how much more tightening will happen this year. Traders remained on sidelines as the likelihood of a repo rate cut in April 2017 remained subdued. Those hoping that the Reserve Bank of India (RBI) would slash interest rates going ahead may just have to wait further as the inflation may have come back to haunt the economy. Higher food, fuel, non-fuel commodities and power prices, and playing out of base effect in February had led to both Wholesale Price Index (WPI) and Consumer Price Index (CPI) or retail inflation soaring northwards to 6.55% and 3.65%, respectively. The WPI inflation was highest in 39 months, while the retail inflation was at a 4-month high. However, losses remained capped as Moody's Investors Service said that BJP's thumping victory in Uttar Pradesh and substantial gains made in other states will facilitate reforms as the ruling party inches closer to a majority in Upper House. It added that the 2017 state election results in India demonstrate broad-based popular support for the Indian government's policy agenda and will facilitate the implementation of further reforms, a credit positive for the sovereign. Sharp rally in rupee hurt the shares of software companies. The rupee climbed at 65.40 per dollar on Wednesday, its strongest since November 2015, compared with its previous close of 65.80. Finally, the BSE Sensex declined 44.52 points or 0.15% to 29398.11, while the CNX Nifty was down by 2.20 points or 0.02% to 9084.80.

The US markets closed higher on Wednesday, after the Federal Reserve raised interest rates for the third time since December 2015. The Fed increased its benchmark interest rate by 25 basis points, noting that headline inflation is moving close to its 2% target. The dot plot, a table of policy makers' projections for short-term rates, showed more unity among the central bankers about their interest-rate forecast and indicated two more hikes this year. The overall tone of the Fed statement wasn't too aggressive, putting to rest some market concerns of a more hawkish central bank. The Fed's policy-setting Federal Open Market Committee (FOMC) voted to raise the key federal funds rate to a range of 0.75-1.0 percent. On the economy front, a gauge of New York-area manufacturing remained close to two-year high levels in March. The Empire State manufacturing survey slipped to 16.4 in March, down only 2.3 points from 18.7 in February. The new-orders index climbed 7.8 points to 21.3 in March, its highest level in several years. The Dow Jones Industrial Average added 112.73 points or 0.54 percent to 20,950.10, the Nasdaq was up 43.23 points or 0.74 percent to 5,900.05, while S&P 500 gained 19.81 points or 0.84 percent to 2,385.26. 

Crude oil futures snapping the seven session declining streak rebounded on Wednesday, after the government data confirmed a surprising drop in U.S. oil inventories. Energy Information Department said that stockpiles dwindled slightly from record highs last week. The International Energy Administration (IEA), meanwhile, said OPEC cuts should end the global supply glut in the first half of 2017. It acknowledged global inventories rose in January for the first time in six months due to soaring US production, but they still predict a deficit of 500,000 barrels per day (bpd) in the first half. Benchmark crude oil futures for May delivery surged by $0.74 or 2.4 percent to $48.86 on the New York Mercantile Exchange. In London, Brent crude for May delivery ended up by $0.91 at $51.82 on the ICE.

Indian rupee strengthened for the third straight session to hit its highest level since November 2015, against the US dollar on Wednesday on continued dollar selling by banks and exporters amid hopes of increased foreign investments in equities. Sentiments also boosted after results over the weekend showed that the ruling Bharatiya Janata Party (BJP) scored an overwhelming win in the key northern state of Uttar Pradesh. Besides, dollar weakness overseas too gave the rupee an upper hand. However, gains remained capped with the data showed that retail inflation rose to a 4-month high of 3.65 per cent in February and wholesale prices shot up to a 39-month high of 6.55 per cent. On the global front, US dollar traded in a narrow rage against yen as investors await the outcome of the Federal Reserve's two-day policy meeting later in the day. Finally, the rupee ended at 65.69, 13 paise stronger from its previous close of 65.82 on Tuesday.

The FIIs as per Wednesday's data were net buyers in equity segment, while they were net sellers in debt segment. In equity segment, the gross buying was of Rs 10237.09 crore against gross selling of Rs 5927.60 crore, while in the debt segment, the gross purchase was of Rs 1144.60 crore with gross sales of Rs 1153.81 crore.

The US markets bounced back in last session; with all the major bourses posting gains of over half a percent after the Fed announced its decision to raise the target range for the federal funds rate by 25 basis points to 0.75 to 1 percent. The Asian markets have made mostly a positive start, tailing the overnight cues from the US markets after the dollar tumbled as the Federal Reserve raised interest rates without accelerating its timeline for future tightening. The Indian markets consolidated in the last session, coming a bit off the highs seen in previous one. Today, the start is likely to be strong tailing the positive global cues, while the traders will also be getting support with reports of India's exports exhibiting a double digit growth of 17.48 percent, valued at $ 24.5 billion in February compared to $ 20.84 billion during the same month last year on increase in shipments of non-petroleum, non gems and jewellery products. Meanwhile, the government on Wednesday launched a new scheme - TIES - for developing export linked infrastructure in states with a view to promote outbound shipments. In other positive development the GST Council is likely to endorse supplementary legislations needed for implementation of the goods and service tax (GST) regime. It may also take up capping the cess to be levied on demerit goods like luxury cars and tobacco products for creation of a corpus that will be used for compensating states for any loss of revenue from GST implementation in the first five years. There will be some buzz in the banking stocks, as the Finance Minister Arun Jaitley has said, the government would consider setting up multiple oversight committees under the Reserve Bank of India (RBI) to examine the cases of non-performing assets (NPAs) referred by banks.

Support and Resistance: NSE (Nifty) and BSE (Sensex)

Nifty Top volumes

• Larsen & Tourbo's wholly-owned subsidiary - L&T Realty has executed a share purchase agreement for selling its entire stake in L&T South City Projects to Pragnya group for Rs 190 crore.  
• Bharti Airtel has launched its 4G services in Jammu & Kashmir, completing a national rollout.
• Wipro has launched 'Wipro HOLMES Cloud BOT', a continuously learning digital consultant, that leverages Wipro's BoundaryLess Data Center solution.
• BHEL has commenced commercial operation of its first 800 MW unit - highest-rating coal-based supercritical thermal power plant.