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Indian equity benchmarks erased almost all their losses to end marginally in the red on Wednesday as the regulatory crackdowns in China continued to impact investor sentiment. Markets opened weak and saw panic selling, as the International Monetary Fund (IMF) has cut India's gross domestic product (GDP) growth forecast to 9.5 percent for the fiscal year to March 31, 2022 as the onset of a severe second COVID-19 wave cut into recovery momentum. This forecast for 2021-22 is lower than the 12.5 per cent growth in GDP that IMF had projected in April before the second wave took a grip. Some concern also came after department-related Parliamentary Standing Committee observes that the stimulus package announced by the government for the economic revival from the pandemic hit economy has been found to be inadequate as the measures adopted were more of loan offering and long-term measures instead of improving the cash flow to generate demand as immediate relief. Traders also took a note of Finance Minister Nirmala Sitharaman informed Parliament that the number of wilful defaulters has increased from 2,208 to 2,494 at the end of March 31, 2021. As per RBI data on global operations, during the last three financial years, public sector banks (PSBs) have effected recovery of Rs 3,12,987 crore in non-performing assets (NPAs) and written-off loans.

Markets however recouped most of its losses in late afternoon trade, as traders found some solace with Minister of State for Finance Pankaj Chaudhary has said increased tax collection in the first quarter this fiscal (Q1FY22) shows that the economy is on the recovery path. Net direct tax collection in the April-June quarter of the current fiscal is over Rs 2.46 lakh crore, as against more than Rs 1.17 lakh crore during the same period of the previous fiscal. Some support also came as Union Minister of State for Finance Bhagwat Kisanrao Karad said that the government has taken a number of steps to facilitate digital banking, doorstep banking services and digital lending platforms.

On the global front, Asian markets were trading in red amid worries that Beijing's regulation of its tech firms and online education industries may spread to other industries. The downside remained limited after U.S. megacap technology companies Google, Microsoft and Apple reported record-breaking profits. Investors also awaited the Fed's policy guidance on inflation and interest rates. European markets were trading higher as a slew of upbeat earnings updates outweighed renewed concerns about Beijing's regulatory crackdown on tech and education companies. Back home, on the sectoral front, pharma stocks were in focus with report that the production linked incentive scheme (PLI) for pharmaceutical products has export generation potential of Rs 1,96,000 crore over a period of six years. Aviation industry’s stocks were in action as the International Air Transport Association (IATA) said the Indian aviation market's recovery has been significantly impacted by caps on fare and capacity that has been placed by the government since May last year.

Finally, the BSE Sensex fell 135.05 points or 0.26% to 52,443.71, while the CNX Nifty was down by 37.05 points or 0.24% to 15,709.40.  

The BSE Sensex touched high and low of 53,024.70 and 52,433.18, respectively and there were 11 stocks advancing against 19 stocks declining on the index.

The broader indices ended mixed; the BSE Mid cap index rose 0.00%, while Small cap index was down by 0.45%.

The top gaining sectoral indices on the BSE were Telecom up by 4.41%, Metal up by 1.41%, TECK up by 0.60%, Basic Materials up by 0.44% and Capital Goods up by 0.03%, while Auto down by 1.01%, Bankex down by 0.81%, Utilities down by 0.74%, Realty down by 0.73% and Consumer Durables down by 0.62% were the top losing indices on BSE.

The top gainers on the Sensex were Bharti Airtel up by 5.08%, Tata Steel up by 2.60%, Indusind Bank up by 1.71%, Bajaj Finserv up by 1.34% and ICICI Bank up by 1.13%. On the flip side, Kotak Mahindra Bank down by 2.64%, Dr. Reddy's Lab down by 2.36%, Mahindra & Mahindra down by 2.27%, Power Grid down by 1.74% and NTPC down by 1.73% were the top losers.

Meanwhile, International Monetary Fund (IMF) has cut India's gross domestic product (GDP) growth forecast to 9.5 percent for the fiscal year to March 31, 2022 as the onset of a severe second COVID-19 wave cut into recovery momentum. This forecast for 2021-22 is lower than the 12.5 per cent growth in GDP that IMF had projected in April before the second wave took a grip. For 2022-23, it expects economic growth of 8.5 per cent, larger than the 6.9 per cent it had projected in April.

IMF has said that India's economy is gradually recovering from a deep contraction in the fiscal year ended March 31, 2021 (7.3 per cent) and a subsequent severe second wave of COVID-19. It estimates the pandemic has reduced per capita incomes in advanced economies by 2.8 per cent, relative to pre-pandemic trends over 2020-2022, compared with an annual per capita loss of 6.3 per cent a year for emerging market and developing economies (excluding China).

It further said these revisions reflect important extent differences in pandemic developments as the delta variant takes over. Close to 40 percent of the population in advanced economies has been fully vaccinated, compared with 11 percent in emerging market economies, and a tiny fraction in low-income developing countries. It also stated that faster-than expected vaccination rates and return to normalcy have led to upgrades, while lack of access to vaccines and renewed waves of COVID-19 cases in some countries, notably India, have led to downgrades.

The CNX Nifty traded in a range of 15,767.50 and 15,513.45 and there were 23 stocks advancing against 27 stocks declining on the index.  

The top gainers on Nifty were Bharti Airtel up by 5.04%, Tata Steel up by 2.81%, SBI Life Insurance up by 2.16%, Divi's Lab up by 2.05% and Indusind Bank up by 1.76%. On the flip side, Kotak Mahindra Bank down by 2.59%, Dr. Reddy's Lab down by 2.55%, Tata Motors down by 2.20%, Mahindra & Mahindra down by 2.09% and Cipla down by 2.09% were the top losers.

European markets were trading higher; UK’s FTSE 100 increased 15.15 points or 0.22% to 7,011.23, France’s CAC increased 46.24 points or 0.71% to 6,578.16 and Germany’s DAX increased 25.01 points or 0.16% to 15,544.14.

Asian markets settled mixed on Wednesday amid worries that Beijing's ongoing regulatory crackdown of its tech firms and online education industries may spread to other industries, while global investors awaited the Fed's policy guidance on inflation and interest rates. Japanese shares ended lower due to concerns over the country's economic recovery outlook after reports that the Japanese capital marked a record number of Covid-19 infection cases.

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