Mumbai: The markets fell sharply in early trade on Thursday but made a partial recovery supported by the rally in healthcare stocks. During the day, the Sensex lost 0.73% or 236.09 points, while the Nifty declined 0.81% or 82.55 points. At 10:53am, the Sensex was down 155.26 points or 0.48% at 32,245.25, and the Nifty fell 56.95 points or 0.56% at 10,084.20, from previous close.

Investors seem to be cautious after the US Federal Reserve left interest rates unchanged on Wednesday but signalled it still expects one rate hike by the end of the year despite recent weak US inflation readings.

According to a Bloomberg report, the central bank has forecasted only two increases in 2019 and one in 2020. It also lowered again its estimated long-term “neutral" interest rate from 3.0% to 2.75%, reflecting concerns about overall economic vitality. As expected, the Fed said it would begin reducing in October its approximately $4.2 trillion in holdings of US treasury bonds and mortgage-backed securities by initially cutting up to $10 billion each month from the amount of maturing securities it reinvests, reported Bloomberg.

However, Viraj Mehta, head and fund manager, Equirus PMS, thinks that the investors are taking money off the table as a usual process following the continuous rally in markets. “The markets are expensive at current levels and investors are probably booking partial profits which may have led to the fall. There is nothing to worry and India is still a strong market on a long-term perspective," he said.

According to Mehta, exporters which have underperformed markets will see some buying interest now as the rupee has started its decline. “Among exporters, selective pharmaceutical stocks are worth looking at as these companies are getting their compliance issues sorted," he added.

The rupee on Thursday weakened over 10-week low against the US dollar. The domestic currency opened at 64.50 a dollar and touched a low of 64.53, a level last seen on 12 July

Healthcare stocks are rising with Dr Reddy’s, Sun Pharma and Cipla gaining 1-6%. BSE Healthcare index is up 1.83%, while most other indices, including Bankex, Auto, FMCG and Metals, are dragging.