Key barometers extended early decline and hit fresh intraday low in morning trade. At 10:26 IST, the barometer index, the S&P BSE Sensex, was down 156.58 points or 0.42% at 36,903.79. The Nifty 50 index was down 58.40 points or 0.53% at 10,860.65. Negative cues from most Asian indices put pressure on the domestic bourses.

The market breadth favored the sellers. On the BSE, 439 shares rose and 1417 shares fell. A total of 82 shares were unchanged. The S&P BSE Mid-Cap index was down 0.94%. The S&P BSE Small-Cap index fell 1.37%.

Overseas, most Asian indices declined with Hong Kong's Hang Seng index flashing a long-term bear market signal. Japanese manufacturing activity shrank for a fourth straight month in August, a preliminary business survey showed on Thursday. The Jibun Bank Flash Japan Manufacturing Purchasing Managers' Index (PMI) rose to a seasonally adjusted 49.5 from a final 49.4 in the previous month, but stayed below the 50 threshold that separates contraction from expansion for a fourth month.

Wall Street's main indexes rose on Wednesday as upbeat earnings from retailers pointed to strength in US consumer demand, and held gains after minutes from last month's Federal Reserve meeting showed policymakers had debated a more aggressive interest rate cut.

Back home, Yes Bank was down 5.43% to Rs 61.85. Vedanta fell 3.43% to Rs 135.10. ONGC declined 2.43% to Rs 118.20.

Hindustan Unilever rose 1.03% to Rs 1869. ITC rose 0.87% to Rs 243.70. TCS advanced 0.58% to Rs 2198.50.

Larsen & Toubro was down 0.29%. The firm said that the consortium of L&T Hydrocarbon Engineering (LTHE) and EMAS AMC (a Subsea7 company) has been awarded a large project by Saudi Aramco. This project consists of twenty eight offshore jackets in Zuluf, Marjan, Safaniya & Ribyan offshore fields of Saudi Arabia.

Tasty Dairy Specialities fell 3.70%. The company said that it has received the credit rating for its fund based and non fund based bank facilities. It added that CRISIL has reaffirmed its 'CRlSIL BBB-/Stable' rating on the long-term bank facilities of the company.

DLF slumped 18.79%. As per reports, the Supreme Court has issued a notice to the company based on a petition that highlighted how DLF had suppressed key information regarding judicial proceedings against its largest chunk of land-bank in Haryana. The reports added that a notice has also been issued to SEBI, which too is party to the case.

The petition seeks an investigation by SEBI on the suppression of material information, as the regime under SEBI Act is strictly disclosure based, with the sole intent of protecting the interest of the investors in the securities market.

Dilip Buildcon fell 1.37%.The infrastructure construction firm said that its board will meet on Monday, 26 August 2019 to consider the proposal for divestment of wholly owned subsidiaries (WOS) of the company to one or more potential investors in a structured manner over a period of time in different tranches.

NCL Industries gained 0.24%. The cement and building materials manufacturing company said that CRISIL had reaffirmed the rating of its bank loan facilities worth Rs 377.25 crore and its fixed deposits worth Rs 75 crore. CRISIL reaffirmed the long term rating of CRISIL A-/ Stable and the short term rating of CRISIL A2+/ Stable of the bank facilities while continuing to maintain its FA/Stable rating on the fixed deposits.

Bharat Heavy Electricals rose 0.62%. Bhel informed that India Ratings & Research had affirmed the company's long-term issuer rating at 'IND AA+'. However, the outlook has been revised from 'Stable' to 'Negative'. The rating agency cited higher than expected decline in the revenues, leading to EBITDA losses in Q1 June 2019 as the primary reason for the rating action.

Equity market regulator Securities and Exchange Board of India (Sebi) on Wednesday eased the regulatory and compliance framework for foreign portfolio investors (FPI) by broad-basing their classification, simplifying their registration requirements and permitting them to carry out off-market transfer of securities. Further, FPIs would now be classified into two categories instead of three. Sebi also relaxed rules on share buybacks for listed firms that own non-banking financial companies and housing finance company subsidiaries. FPI regulations have been re-drafted based on the recommendation of a committee headed by former RBI deputy governor H.R. Khan. The requirements for issuance and subscription of offshore derivative instruments have also been rationalised. Offshore funds floated by mutual funds would be allowed to invest in the country after registration as FPIs. Further, Sebi said that various issues need to be examined before deciding on mandating 35% minimum public shareholding in listed companies as proposed in the Union Budget.

Meanwhile, the Reserve Bank of India (RBI) on Wednesday released the minutes of the monetary policy committee meeting held during 5-7 August 2019. RBI Governor Shaktikanta Das said that the weakening of domestic growth impulses and unsettled global macroeconomic environment saw the need to bolster dwindling domestic demand and support investment activity.

Hence, the Monetary Policy Committee (MPC) decided to reduce the policy repo rate under the liquidity adjustment facility (LAF) by 35 basis points (bps) to 5.40%. The MPC also decided to maintain the accommodative stance of monetary policy. Four of the six members of the MPC voted to reduce the policy rate by 35 bps.

Economic activity has shown signs of further weakening since the last MPC meeting in June 2019. Several high frequency indicators have either slowed down or contracted in recent months. Headline CPI inflation has evolved broadly along the projected lines; CPI inflation excluding food and fuel continued to soften, while food inflation has edged up. Global economic activity has been losing pace, weighed down by intensifying trade tensions and geo-political uncertainty. GDP numbers for Q2:2019 in respect of some major advanced and emerging market economies have been subdued. Central banks in both advanced and emerging market economies have been increasingly resorting to more accommodative stances of monetary policy, Das stated.

Inflation expectations of households in the July 2019 round of the Reserve Bank's survey moderated further by 20 basis points for the 1-year ahead horizon, though they remained unchanged for the 3-month ahead horizon. Cumulatively, inflation expectations of households have declined significantly by 180 basis points for the 3-month horizon and 190 basis points for the 1-year horizon in last five survey rounds, he added.

MPC member Dr. Chetan Ghate did not want a 35 bps cut as banks had not yet passed on earlier cuts. He voted for a more modest 25 bps cut. It should also be highlighted that there has been inadequate monetary transmission given the quantum of past rate cuts: the weighted average lending rate (WALR) on fresh rupee loans in the banking system has come down by only 29 bps despite the MPC cutting rates by 75 bps in the February-June window. By a large cut (35 bps) I feel we will be burning through monetary policy space without much to show for it. While the real economy needs some support, we should wait for more transmission to happen, Ghate stated.

On the political front, the Central Bureau of Investigation (CBI) on Wednesday arrested former finance minister P Chidambaram. Chidambaram was arrested in the INX Media case, in which he has been accused of wrongdoing, money laundering and misusing the post of finance minister. Chidambaram reportedly spent the night at the CBI lockup after he evaded arrest for 24 hours.

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