Stock market today: BSE Sensex closes 131 points down; Nifty50 below 25,400 ahead of key US Fed meeting

Stock market today: Indian equities retreated from their record highs on Wednesday, with information technology and pharmaceutical stocks leading the decline ahead of the U.S. Federal Reserve's rate decision, which is expected within hours.
The NSE Nifty 50 slipped 0.16% to 25,377.55, while the S&P BSE Sensex dipped 0.16% to 82,948.23. Earlier in the session, both indices had risen about 0.25% each to reach new all-time highs before reversing course.
IT companies, which generate a significant portion of their revenue from the United States, experienced their worst session in six weeks, falling by 3%.The Fed is widely anticipated to cut rates, but uncertainty remains regarding the magnitude of the cut, whether it will be 25 or 50 basis points. The probability of a 50-bps cut has increased from 34% last week to 65%.
A larger rate cut could potentially attract foreign funds to emerging markets like India in pursuit of higher returns. However, concerns have arisen that the Fed may have initiated its easing cycle too late, potentially compromising economic growth. The Fed's rationale for its decision and its future policy guidance are expected to shape the near-term trajectory of Indian equities, particularly in terms of foreign inflows and the outlook for the IT and pharmaceutical sectors.
The Nifty pharma index declined by 1.5%, with nine out of the 13 major sectors ending the day in negative territory. Nonetheless, the heavily weighted financials sector gained 1.4%, helping to limit overall losses in the benchmarks.
Hemang Kapasi, head of equities at Sanctum Wealth, told Reuters that despite markets holding near record highs due to liquidity, there is a gradual shift towards sectors with more attractive valuations. Bajaj Finance, a non-bank lender, rose 3.6% following Morgan Stanley's reiteration of a "buy" rating based on its appealing valuations.
The broader and more domestically-oriented small-cap and mid-cap indices declined by approximately 0.4% and 0.7%, respectively. Rupak De, a senior analyst at LKP Securities, attributed the intraday drop to profit-taking by some traders at record high levels.