Dollar ended at 65.7100 against its opening at 65.3500. Dollar extended gains during European trades tracking the similar movement in spot on expectations of a Federal Reserve rate increase amid overseas fund outflows from local stocks. The dollar pared gains against its major peers after Fed's Yellen defended central bank's projection for a gradual path of rate hikes over the next few years despite the past few months of unexpectedly low inflation. At a National Association for Business Economics meeting in Cleveland, Yellen said, however, the Fed could slow the pace of rate hikes if low inflation persists and officials conclude it reflects long-term changes in the economy rather than transitory factors. On the US economic front, new home sales in the US unexpectedly showed a sharp decrease in the month of August, reported the Commerce Department on Tuesday. The Commerce Department said new home sales tumbled by 3.4% to an annual rate of 560,000 in August from the revised July rate of 580,000.

Sensex provisionally ends down 394 points with 29 components in the red,Nifty provisionally ends down 1.34 percent at 9,739 points.

INTERNATIONAL

Asian shares rose on Wednesday as investors hoped for progress on major tax reform in the United States, while the dollar hovered near one-month highs on growing expectations of a U.S. interest rate increase in December.

Chinese bitcoin exchange BTCChina said that it will stop accepting yuan and digital asset deposits on Wednesday as it prepares to wind down its mainland-based trading platform at the end of September.

Gold prices were steady early  after falling over 1 percent in the previous session on hawkish comments from U.S. Federal Reserve Chair Janet Yellen.

Brent oil prices rose, hovering around a 26-month high hit in the previous session, after U.S. data showed an unexpected drop in crude stocks as refineries boosted output and amid threats from Turkey to cut crude exports from Iraq.

Saudi Arabia’s ambassador to the United States, speaking to reporters on Tuesday after the kingdom announced it would permit women to drive, said the decision was not just a major social change but part of the country’s economic reforms.