Mumbai: India’s benchmark indices declined on Wednesday as the overnight plunge on Wall Street on renewed concerns over the US-China trade gave investors a jolt.

Though the Reserve Bank of India’s decision to keep interest rates unchanged eased sentiment, the market is on the edge ahead of the elections in two major states — Madhya Pradesh and Rajasthan. Sensex ended down about 250 points, or 0.7 per cent, from the previous close to end at 35,884.41 while the NSE Nifty ended down 86.60 points, or 0.7 per cent, to close at 10,784.95.

Key Asian indices ended down 0.4-1.6 per cent. On Tuesday night, US markets fell over 3 per cent after the initial euphoria over the US-China agreement on tariff ceasefire waned after conflicting comments from US President Donald Trump and some senior officials.

The BSE Mid and SmallCap indices saw a steeper fall, ending down 1.2 per cent each. The fall in Sun Pharmaceutical Industries’ shares by over 6 per cent to Rs 413.60 also weighed on the Sensex and the Nifty.

The stock hit an over five-year low on Wednesday even as the company made a clarification related to the corporate governance and whistleblower issues. Tata Steel, Vedanta, Tata Motors and Mahindra Mahindra were the other big laggards in the Sensex, ending down 3-4 per cent. Money managers said the market fall was largely due to weakness in global markets. “Wednesday’s fall had largely to do with global markets.

There are concerns on growth peaking out, especially in the US.

We are seeing slowdown in the domestic economy also,” said Piyush Garg, chief investment officer at ICICI Securities. RBI, in its monetary policy on Wednesday, maintained ‘calibrated tightening’ stance and projected H1 FY20 GDP growth at 7.5 per cent.

The central bank also cut its inflation projection for the second half of FY19 to 2.7-3.2 per cent from 3.9-4.5 per cent earlier. “Actual inflation outcome is undershooting RBI expectations.

However, FY20 inflation expectation is higher than FY19 as the low food and sharp decline in oil prices are unsustainable.

RBI feels there could be upside risk to inflation,” said Vinit Sambre, head of equities at DSP Mutual Fund. Sambre said that the state elections’ outcome on December 11 would be the next major trigger for the market.

Chhattisgarh, Madhya Pradesh, Mizoram, Rajasthan and Telangana are holding polls. “The market expects the BJP to retain Chhattisgarh and Madhya Pradesh but lose Rajasthan.

Thus, a 3-0 score for the BJP may extend the current rally while a 0-3 or 1-2 loss (Madhya Pradesh and Rajasthan) for the BJP may result in a sharp correction in the market with the market likely to take a dim view of the BJP’s prospects in the general elections in April-May 2019 given the large contribution of the three states in the BJP’s 2014 win,” said Kotak Institutional Equities in a note earlier this week. The direction of oil prices based on the outcome of OPEC meeting on Thursday will also be keenly eyed by market participants. On Wednesday, Foreign Portfolio Investors net sold Indian shares worth Rs 358 crore and DIIs net sold Indian shares worth Rs 791.6 crore.