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Indian equities continued their weak trade in the afternoon session on account of selling in front line counters coupled with expectation of rate hike by the U.S. Federal Reserve. The Federal Reserve starts its latest policy-setting meeting on Tuesday, and is expected to raise rates by a half-point when it delivers its decision on Wednesday. Selling further crept in as International Monetary Fund (IMF) said India may only become a $5-trillion economy in FY29. According to data from the IMF's World Economic Outlook Database, updated last month, India's nominal GDP is seen rising to $4.92 trillion in FY28. As such, it will only be in the following year, or FY29, that the GDP will cross the $5-trillion mark. On the global front, Asian markets were trading mostly in red with markets in China, Japan and some other markets still closed for holidays.

Back home, in scrip specific developments, Tata Steel declined despite reporting 37% rise in Q4 consolidated net profit, while Route Mobile jumped on inking agreements with Teledgers. The market breadth on BSE was negative, in the ratio of 2153: 1092.

The BSE Sensex is currently trading at 56415.84, down by 560.15 points or 0.98% after trading in a range of 56340.77 and 57184.21. There were 6 stocks advancing against 24 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index lost 0.90%, while Small cap index was down by 0.49%.

The few gaining sectoral indices on the BSE were PSU up by 0.23%, IT up by 0.12% and Oil & Gas was up by 0.03%, while Consumer Durables down by 2.33%, Healthcare down by 2.10%, Metal down by 1.26%, Consumer Discretionary down by 1.26% and Utilities was down by 1.16% were the top losing indices on BSE.

The top gainers on the Sensex were Power Grid up by 2.18%, NTPC up by 1.02%, ITC up by 0.44%, Infosys up by 0.43% and Wipro was up by 0.26%. On the flip side, Bajaj Finserv down by 2.78%, Dr. Reddy's Lab down by 2.60%, Sun Pharma down by 2.53%, Titan Company down by 2.43% and Reliance Industries was down by 2.26% were the top losers.

Meanwhile, ICRA Ratings in its latest report has said that tax devolution by the central government is likely to exceed the budget estimate by at least Rs 1.1 lakh crore in FY23, leading to compression in the gross borrowing by states to Rs 8.4 lakh crore. However, the borrowing cost for the states went up from 7.17 per cent in Q4 FY22 to 7.34 per cent on May 2 this fiscal.

The report stated that the central tax devolution is likely to rise to Rs 9.3 lakh crore in FY23 from Rs 8.8 lakh crore in FY22 and from Rs 8.2 lakh crore estimated in the FY23 budget. The FY22 devolution was higher than the revised estimate of Rs 7.4 lakh crore and 2.8 per cent lower at Rs 8.1 lakh crore. It said during the first five weeks of the first quarter of this fiscal, states have borrowed 82 per cent less than what was indicated in the borrowing calendar, at just Rs 12,400 crore against Rs 67,200 crore indicated initially by 19 states, following higher-than-expected devolution in Q4 FY22 at Rs 95,100 crore on March 24, and 31.

The agency had estimated net and gross SDL (State Development Loan) issuance in FY23 at Rs 6.6 lakh crore and Rs 8.9 lakh crore, respectively last month. But taking into account the actual issuance, which is 82 per cent lower than indicated so far, it estimates the gross issuance at Rs 8.4 lakh crore, and adjusting for the expected redemptions of Rs 2.4 lakh crore in this fiscal, net issuance is likely to be Rs 6 lakh crore, up only 21.9 lakh crore from Rs 4.9 lakh crore in FY22. It noted that the pattern of monthly tax devolution releases and the timing of GST compensation payout for December and March quarters for FY22 and Q1FY23 will not only impact SDL issuance but also cull the demand for Ways and Means Advances (WMA) and Overdraft (OD) in FY23.

The CNX Nifty is currently trading at 16900.20, down by 168.90 points or 0.99% after trading in a range of 16879.85 and 17132.85. There were 11 stocks advancing against 38 stocks declining, while 1 stock remain unchanged on the index.

The top gainers on Nifty were Britannia Inds up by 5.22%, ONGC up by 3.58%, Power Grid up by 2.03%, NTPC up by 0.95% and UPL was up by 0.48%. On the flip side, Apollo Hospital down by 4.60%, Adani Ports down by 3.36%, Bajaj Finserv down by 2.81%, Dr. Reddy's Lab down by 2.69% and Sun Pharma was down by 2.61% were the top losers.

Asian markets were trading mostly in red; Hang Seng decreased 248.87 points or 1.18% to 20,853.02, Straits Times trembled 4.41 points or 0.13% to 3,352.49 and KOSPI was down by 3.63 points or 0.14% to 2,676.83. On the flip side; Taiwan Weighted was up 66.93 points or 0.41% to 16,565.83.

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