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Indian equity benchmarks recouped most of their initial losses, but ended in the negative zone on Wednesday amid dull global cues. Key gauges made gap-down opening and remained under immense selling pressure during early deals, as traders were concerned as domestic ratings agency Icra said India's current account deficit (CAD) will widen to 5 per cent of the GDP in the September quarter due to higher merchandise trade deficit. The trade deficit has doubled to $28.7 billion for August due to a 36.8 per cent expansion in imports and a 1.2 per cent decline in export earnings. Domestic sentiments remained pessimistic, amid private report estimating that India's consumer price index (CPI) firmed to 6.9% year-on-year in August, while core inflation likely stood at 6%.

However, key gauges recovered most of their lost ground and came off day’s lows in late afternoon deals, taking support from Moody's Investors Service’s statement that India's economic recovery is unlikely to be derailed by rising challenges to the global economy, higher inflation and tightening financial conditions,  and affirmed a stable outlook for the country's rating Baa3. Also, Moody's saw the Indian economy expanding by 7.6 per cent in the current fiscal compared to 8.7 per cent growth in the last financial year that ended on March 31. For 2023-24, it estimates a 6.3 per cent GDP growth. Some support also came as Commerce and Industry Minister Piyush Goyal’s statement that India's goods and services exports have already crossed $675 billion in the last fiscal year and the country is now aspiring to take international trade to $2 trillion by 2030. 

On the global front, European markets were trading lower as Destatis reported German industrial production fell 0.3 percent on a monthly basis, reversing a 0.8 percent rise in June, Destatis reported. Output was forecast to decline 0.5 percent. Year-on-year, industrial production logged a decline of 1.1 percent after easing 0.1 percent in June. All eyes now turn to the European Central Bank (ECB) meeting due Thursday given talk of a faster pace of tightening. Asian markets settled mostly lower on Wednesday as solid U.S. services data released overnight reinforced investor expectations for a more aggressive pace of FOMC rate hikes. Chinese trade data missed expectations, adding to headwinds for the world's second-largest economy.

Back home, fertiliser sector stocks were in focus with a private report that government may look to privatise PSUs in the sector. According to the PSE policy, 2021, the government will look at leaving non-strategic sectors, such as fertiliser, steel and tourism, by privatising or closing PSUs. Renewable energy stocks remained in limelight as Crisil Ratings said receivables of leading renewable companies will shrink 20 per cent during this financial year. Leading renewable energy (RE) companies are set to see their receivables reduce a fifth from 180 days a year ago to 140 days as of March 2023, a level last visible pre-COVID.

Finally, the BSE Sensex fell 168.08 points or 0.28% to 59,028.91 and the CNX Nifty was down by 31.20 points or 0.18% to 17,624.40.

The BSE Sensex touched high and low of 59,166.46 and 58,722.89, respectively. There were 12 stocks advancing against 18 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index rose 0.46%, while Small cap index was up by 0.73%.

The top gaining sectoral indices on the BSE were Basic Materials up by 0.94%, Telecom up by 0.87%, Healthcare up by 0.69%, Consumer Durables up by 0.59% and Industrials up by 0.43%, while Auto down by 1.12%, Power down by 0.91%, Utilities down by 0.75% and Bankex down by 0.51% were the top losing indices on BSE.

The top gainers on the Sensex were Ultratech Cement up by 4.13%, TCS up by 0.71%, Sun Pharma up by 0.71%, Wipro up by 0.69% and Bajaj Finance up by 0.56%. On the flip side, Indusind Bank down by 1.69%, Mahindra & Mahindra down by 1.32%, Maruti Suzuki down by 1.15%, Bharti Airtel down by 1.08% and SBI down by 0.95% were the top losers.

Meanwhile, domestic ratings agency Icra in its note has said that India's current account deficit (CAD) will widen to 5 per cent of the Gross domestic product (GDP) in the September quarter of current fiscal (Q2FY23) due to higher merchandise trade deficit. The trade deficit has doubled to USD 28.7 billion for August due to a 36.8 per cent expansion in imports and a 1.2 per cent decline in export earnings.

It mentioned ‘The current account deficit (CAD) is projected to widen to an all-time high of USD 41-43 billion in Q2 FY23 from the USD 30 billion expected in Q1 FY23. It is expected to widen to 5 per cent of GDP in Q2 FY23, the second highest level since Q3FY12.’ It stated for the first two months of the quarter, the monthly average trade deficit has trended higher at USD 29.3 billion as against USD 23.5 billion in the June quarter, driven by strong domestic demand which led to a surge in the imports while exports remained subdued amid international slowdown fears.

Further, CAD will moderate to 2.7 per cent of GDP in the second half of the fiscal, benefitting from lower commodity prices and seasonally stronger exports, it said, adding that a potential recession in major economies may dampen growth in merchandise and services exports in H2 FY23 as well. Moreover it said, overall, the CAD is projected to widen to an all-time high of USD 120 billion (3.5 per cent of GDP) in FY23 from USD 38.7 billion (1.2 per cent of GDP) in FY22. It added that the gap will be lower than the 4.8 per cent witnessed in FY13.

The CNX Nifty traded in a range of 17,650.75 and 17,484.30. There were 25 stocks advancing against 25 stocks declining on the index.

The top gainers on Nifty were Shree Cement up by 8.43%, Ultratech Cement up by 4.46%, Adani Ports &SEZ up by 3.04%, Coal India up by 2.71% and Grasim Industries up by 1.67%. On the flip side, Tata Motors down by 2.52%, Bajaj Auto down by 2.07%, Indusind Bank down by 1.70%, Mahindra & Mahindra down by 1.33% and Maruti Suzuki down by 1.25% were the top losers.

European markets were trading lower; UK’s FTSE 100 decreased 45.75 points or 0.63% to 7,254.69, France’s CAC decreased 24.94 points or 0.41% to 6,079.67 and Germany’s DAX decreased 52.47 points or 0.41% to 12,818.97.

Asian markets settled mostly lower on Wednesday as strong services activity data released overnight reinforced expectations for a more aggressive pace of FOMC interest rate hikes. Japanese shares declined despite exporters' boost from weak yen. Chinese shares traded almost flat with positive momentum, even as trade data missed expectations that added to concerns over the health of the global economy. Data showed that China’s exports grew 7.1% in August from a year earlier, but missed forecast growth of 12.8%.

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