Nifty, Sensex fall on concerns of softening global growth

Domestic equity benchmarks edged lower on Wednesday as investors traded with caution after the International Monetary Fund (IMF) lowered global economic growth outlook.

On Tuesday, the IMF reduced its global economic growth outlook by 0.2 percentage points to 3.3 per cent, citing the US-China trade war and a potential disorderly British exit from the European Union as key risks.

It also warned of high chances of further cuts to the outlook.

Losses in financials also weighed on the main board.

Asian shares slipped on the IMF downgrade, while the US President Donald Trump`s threat to impose tariffs on $11 billion worth of European Union products added to investor woes.

"While India maybe among the fastest-growing economies of the world, a slowdown in global growth would definitely hurt (the markets) along with factors like higher crude prices," said Siddhartha Khemka, head of retail research at Motilal Oswal Securities.

"Strong FII inflows over the last couple of months, which lifted domestic markets, could reduce and we could also see profit-booking."

The broader NSE Nifty was down 0.18 per cent at 11,651.45 as of 0633 GMT, while the benchmark BSE Sensex was 0.20 per cent lower at 38,859.83.

Cautious sentiment prevailed ahead of March-quarter earnings beginning later this week. Research firms Nomura and Jefferies forecast a weak quarter for Indian auto and oil and gas companies, citing weak volume growth and refining/petchem margins.

Nomura is optimistic on the pharmaceutical sector, saying prescription volumes have increased for most companies year-on-year as they gained market share. The index was up 0.7 per cent.

Among financials, index heavyweight HDFC Bank Ltd lead the decline. The private-sector lender was down 1.3 per cent.

Aluminium producer Hindalco Industries Ltd fell to its lowest in over a month after reporting a spillage at its Jharkhand plant. Stock fell as much as 3.45 per cent.

Among gainers, Reliance Industries Ltd and Oil and Natural Gas Corp Ltd rose over 1 per cent each, taking the energy index 0.2 per cent higher.