Equity indices subdued as IMF predicts Indian economy to contract by 4.5%

Equity benchmark indices edged lower during early hours on Thursday due to weak global cues after the International Monetary Fund forecast the global output to shrink by 4.9 per cent this year.

A surge in coronavirus cases worldwide also spooked investor confidence. The IMF predicted the Indian economy to contract by 4.5 per cent following a longer COVID-19 lockdown period and slower recovery than anticipated in April.

At 10:15 am, the BSE S&P Sensex dropped by 166 points or 0.48 per cent at 34,703 while the Nifty 50 slipped by 34 points or 0.33 per cent at 10,271.

Sectoral indices at the National Stock Exchange were mixed with Nifty PSU bank down by 1.2 per cent, private bank by 1.1 per cent and IT by 0.9 per cent.

Among stocks, Bharti Infratel was down by 4.7 per cent to Rs 222.05 following the board's decision to extend the deadline for a merger with Indus Towers by over two months till August 31.

IT majors Infosys and HCL Technologies fell by 2 per cent and 1.7 per cent respectively while HDFC Bank edged lower by 1.7 per cent, Axis Bank by 1.6 per cent and Kotak Mahindra Bank by 1.1 per cent.

Eicher Motors, ONGC, Bajaj Finserv and Tata Steel too traded with a negative bias. However, those which gained were GAIL, ITC, Hero MotoCorp, Bajaj Auto and Vedanta.

Meanwhile, Asia's stock markets slipped as surging US coronavirus cases, global trade tensions and an IMF downgrade to economic projections knocked confidence in a recovery.

The IMF said it now expects a deeper global recession with output to shrink by 4.9 per cent this year, much sharper than the 3 per cent contraction predicted in April.

MSCI's broadest index of Asia Pacific shares outside Japan fell by 0.7 per cent and Tokyo's Nikkei slumped by 1.4 per cent.

Markets in Hong Kong and mainland China were closed for public holidays on Thursday.