The Indian stock market started off on a firm note, gained in strength as the session progressed, but pared most of its gains past mid afternoon, as the mood turned quite cautious amid concerns about near term growth outlook following lowering of growth forecasts by Morgan Stanley and Fitch Ratings.
The RBI's decision to ask banks to maintain incremental CRR of 100% on deposits received between September 16 and November 11 for the fortnight beginning last Saturday, continued to weigh on the market. CRR, which is the portion of the deposits which banks are required to park to the RBI, stood at 4% earlier.
Global cues too were not any supportive, with Asian markets closing on a mixed note after sluggish sessions and major European markets somewhat subdued.
The BSE benchmark Sensex ended up 43.84 points or 0.17% at 26,394.01, after having risen to 26,587.07 early on in the session. The Nifty50 of the National Stock Exchange, which rose to 8197.35, ended at 8142.15, gaining 15.25 points or 0.19%.
In the forex market, the rupee was trading at 68.64 against the U.S. dollar around late afternoon, up 13 paise from its previous close of 68.77.
Automobile, consumer discretionary and telecom stocks were in demand. Shares of non-banking financial companies rallied, even as bank stocks stayed sluggish. Metal, realty, oil, power, information technology, healthcare and FMCG stocks turned in a mixed performance. Midcap and smallcap stocks found modest support and managed to outperform the big ones.
Among automobile stocks, Maruti Suzuki gained 4%, Hero Motocorp ended 2.1% up, Mahindra & Mahindra gained 1.9% and Tata Motors advanced 1.1%, while Bajaj Auto ended nearly 1% up. Eicher Motors ended 5.2% up
Asian Paints, GAIL India, Bharti Airtel, Adani Ports and Coal India gained 1.2% - 2.2%. Reliance Industries gained nearly 1%. Lupin, HDFC, Wipro, Tata Steel and Dr Reddy's Laboratories posted modest gains.
Idea Cellular ended nearly 5% up. Bosch gained 4.5%. Bharti Infratel, BHEL, Grasim Industries, Tata Motors DVR, IndusInd Bank and Aurobindo Pharma gained 1% - 2%. UltraTech Cement and Ambuja Cements ended modestly higher.
Hindalco, Axis Bank, Sun Pharmaceutical Industries, BPCL, ITC, Bank of Baroda, Kotak Bank, NTPC, Hindustan Unilever, Tech Mahindra, Infosys and Tata Power declined 0.5% - 1.7%.
Timken India and Triveni Engineering & Industries saw some strong buying on impressive quarterly results. Mahanagar Gas also attracted buyers on good results, while weak results triggered some selling at Cox & Kings and Hindustan Composite counters.
Pfizer, Natco Pharma and Surana Solar had a good spell in positive territory on stock specific news.
The market breadth was strong. Out of 2797 stocks traded on BSE, 1567 stocks posted gains. 1028 stocks declined and 202 stocks ended flat.
Fitch Ratings has lowered India's GDP growth forecast to 6.9% in the current financial year, down from an earlier forecast for a 7.4% growth, citing the likely impact of demonetisation on the economy.
On Monday, Morgan Stanley lowered its growth forecast for India in financial year 2017 to 7.3% from its earlier projection of 7.7%, on account of currency replacement programme. But then, it expects investments and capacity expansion in 2018 after a gap of six years of weak trend.