Stocks on Thursday snapped a two-day rally as the buoyancy over a Trump victory faded and the focus shifted to the policies of the new regime.

Investors also stayed on the sidelines ahead of the US Fed decision on interest rates.

The rupee was also hit by persistent FPI (foreign portfolio investors) outflows in the equity markets and expectations that Trump’s victory would be positive for assets such as the dollar and treasuries. The domestic currency closed at a record low of 84.37 against the dollar against its previous close of 84.28 after hitting an all-time intra-day low of 84.3775 during the session.

Gold and silver prices slumped in the national capital on Thursday, with the precious metal declining ₹1,650 and slipping below the ₹80,000-mark, according to the All India Sarafa Association.

The 30-share Sensex surrendered a large part of the gains seen yesterday and closed with a cut of 836.34 points or 1.04 per cent, while the Nifty also cracked 1.16 per cent to end 284.70 points lower at 24199.35. During intra-day trades, the Sensex crashed almost 959 points to hit a low
of 79419.34.

``The Indian markets started pricing in the effects of Donald Trump winning the US election on emerging markets’ financial assets, which weighed on the risk-on sentiments,’’ Deepak Jasani, head of retail research at HDFC Securities, said.

Investors will now be focussing on the US Federal Reserve interest rate decision. The Fed is expected to cut rates, but it is likely to be less than the 50 basis point cut in September. All eyes will be on Fed chair Jerome Powell's news conference, where he is likely to offer a guidance on future policy moves.

The markets are largely expecting a 25-basis point cut in borrowing costs while they will also watch out for its guidance. Ahead of its ruling, the Bank of England slashed interest rates by a quarter of a percentage point to 4.75 per cent — its second cut in three months.

Tech Mahindra was the top loser in the Sensex pack falling by 2.50 per cent. It was followed by Tata Motors, Sun Pharma, IndusInd Bank, Asian Paints and JSW Steel among others which declined up to 2.36 per cent.

At the forex markets, the rupee fell to another record low of 84.37 against the greenback. This came even as the dollar index which gauges its strength against six other currencies was trading marginally weak at 104.60 ahead of the Fed decision.

“Investors positioned themselves ahead of the key Federal Reserve meeting. The FPIs have maintained a net selling stance in
Indian markets, further weighing on the rupee’s value,’’ Jateen Trivedi, research analyst at LKP Securities said.