Sensex, Nifty pare intraday losses

Key barometers sharply pared intraday losses in mid-morning trade. At 11:21 IST, the barometer index, the S&P BSE Sensex, was down 41.09 points or 0.12% at 33,850.04. The Nifty 50 index was down 24.40 points or 0.24% at 10,174. Trading sentiment was affected amid worsening relationship between the Reserve Bank of India and the government.

Among secondary barometers, the BSE Mid-Cap index was down 0.16%. The BSE Small-Cap index was down 0.22%. Both these indices outperformed the Sensex.

The market breadth, indicating the overall health of the market, was negative. On BSE, 977 shares rose and 1085 shares fell. A total of 117 shares were unchanged.

Metal shares declined. Hindustan Zinc (down 8.17%), National Aluminium Company (down 3.19%), Hindalco Industries (down 2.77%), Steel Authority of India (down 2.37%), JSW Steel (down 2.1%), NMDC (down 2.01%), Jindal Steel & Power (down 1.94%), Hindustan Copper (down 1.54%) and Vedanta (down 1.21%), edged lower.

Tata Steel was down 5.22%. The steel major's joint venture with Thyssenkrupp AG to set up a European steel company with equal shares of ownership reportedly face an in-depth European Union probe over concerns that the deal could reduce competition in the supply of various high-end steels.

Most FMCG shares rose. Nestle India (up 1.95%), Britannia Industries (up 0.92%), Dabur India (up 0.91%), Bajaj Corp (up 0.81%), Marico (up 0.58%), Jyothy Laboratories (up 0.32%), GlaxoSmithKline Consumer Healthcare (up 0.26%) and Colgate Palmolive (India) (up 0.07%), edged higher. Procter & Gamble Hygiene & Health Care (down 0.13%), Godrej Consumer Products (down 0.68%), Hindustan Unilever (down 1.41%) and Tata Global Beverages (down 5.24%), edged lower.

The government has reportedly invoked never-before-used powers under the RBI Act allowing it to issue directions to the central bank governor on matters of public interest.

Media reports suggested that Section 7 of the RBI Act empowers the government to consult and give instructions to the governor to act on certain issues that the government considers serious and in public interest. This Section had never been used in independent India till now, reports added.

India's finance minister Arun Jaitley criticised the Reserve Bank of India (RBI) for failing to prevent lending excess in a speech on Tuesday, 30 October 2018. The central bank looked the other way when banks gave loans indiscriminately during 2008 to 2014, Jaitley reportedly said while speaking at an event in New Delhi. According to media reports, tensions between the finance ministry and the RBI have risen since the bank's deputy governor said in a speech on Friday that undermining a central bank's independence could be "potentially catastrophic", in an indication that it is pushing back hard against government pressure to relax its policies and reduce its powers.

Overseas, most stocks in Asia rose on Wednesday. Chinese official manufacturing Purchasing Managers' Index (PMI) was 50.2. The official manufacturing PMI had been 50.8 in September. China's official non-manufacturing purchasing managers index dropped to 53.9 from September's 54.9, the National Bureau of Statistics said on Wednesday. A reading above 50 indicates expansion, while a reading below that signals contraction.

US stocks closed higher Tuesday as President Donald Trump signaled that the US is ready to reach a deal to ease trade tensions with China, giving the market some much-needed relief. Markets were also digesting a raft of quarterly corporate results with several big-name companies set to report earnings this week.

On the US data front, home-price gains are slowing, as the Case-Shiller 10-city composite index showed a 0.6% increase from last month's reading, or a 5.5% annual increase. The 20-city composite index rose a seasonally adjusted 0.1% and was 5.5% higher compared to its level a year ago, the lowest annual increase in nearly two years.

Consumer sentiment hit an 18-year high, according to the Conference Board's consumer confidence index, which rose to 137.9, from 135.3 in September.

The residential vacancy rate fell 0.4% points from a year earlier to 7.1%, according to the Census Bureau report, which also showed that the US homeownership rate was virtually unchanged at 64.4%.

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