Federal Reserve officials said that it would be appropriate to raise interest rates in June if economic data points to stronger second-quarter growth as well as firming inflation and employment.
A rate hike in US would make it less attractive for foreign investors to put money in emerging markets like India, analysts said.
Meanwhile, traders were closely tracking the counting of votes for the recently-held assembly elections. Trends indicate that the BJP will for a government tin Assam and increase its vote share in the states of West Bengal, Tamil Nadu and Kerala, as predicted by exit polls.
K.K. Mital, head of portfolio management at Globe Capital Market, said a BJP victory in Assam will be positive for the government, as it will be able to push forward its reform agenda more strongly.
"Investors are looking at how the position of the NDA government changes in Rajya Sabha post assembly elections, where key legislations like GST are pending," said Lancelot D'Cunha of Crest Wealth Management.
Sun TV shares sank over 10 per cent today as trends indicated the AIADMK will return to power in Tamil Nadu. Sun TV shares had gained sharply over the last few days on hopes of a DMK victory in Tamil Nadu. Chennai-based Sun TV is owned by Kalanithi Maran, the grandnephew of DMK President M Karunanidhi.
Corporate earnings will continue to be in focus. Punjab National Bank, which reported a record quarterly loss yesterday, traded 2 per cent lower today.
Drugmaker Lupin will report Q4 numbers today, along with budget carrier SpiceJet, whose fortunes have changed dramatically over the last year.
As of 10.00 a.m., the Sensex traded 114 points lower at 25,591, while the Nifty was down 33 points at 7,837.
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