Shares declined on Wednesday, with metal stocks leading a broad-based retreat as investors fret over the rising Covid-19 cases in China and the Federal Reserve's interest-rate hiking path.
The Nifty 50 index was down 0.70% at 18,104.10 as of 11:22 a.m. IST, while the S&P BSE Sensex fell 0.69% to 60,869.73.
The minutes of the Fed's December meeting are due during U.S. business hours. The central bank raised rates by 50 basis points last month after four straight 75-bps hikes and signalled rates could stay higher for longer. Wall Street fell overnight.
Indian equities, too, dropped due to caution ahead of the minutes, said Neeraj Dewan, director at Quantum Securities.
Asian markets, however, recovered from a mixed start, with MSCI Asia ex Japan, rising 1.39% on hopes of swift post-covid era recovery in China.
Among the main Indian sectors, the metals index slid 1.5%. Thirty-six of the Nifty 50 constituents were lower, with Hindalco Industries, JSW Steel among the top losers.
Analysts said the uncertainty over demand recovery in China due to the surge in covid-19 cases has forced metal companies to offer retailers discounts, diluting the effect of higher prices.
"While the prices across metal segments ... have risen in January, companies' margins are not seeing a significant improvement," said Mohit Lohia, research analyst at ICICI Securities.
Among individual stocks, Vedanta fell 3% after reporting a 9% drop in average gross operated production for the third quarter, while aluminium production also declined.
On the flip side, Equitas Small Finance Bank rose over 5% after the Reserve Bank of India gave SBI Funds Management approval to buy a stake in the lender.