The Sensex and the Nifty edged slightly lower on Wednesday for a second straight session as a steep fall in Chinese markets revived global risk aversion, while caution ahead of key corporate earnings also weighed on the sentiment.

The benchmark BSE index ended lower by 19.17 points or 0.07 per cent at 27,287.66 after rising as much as 0.5 per cent before China's markets began their steep fall.

Similarly, the 50-share NSE index Nifty ended down by 9.95 points or 0.12 per cent at 8,251.70.

Among BSE sectoral indices, realty index fell the most by 1.79 per cent, followed by capital goods 1.04 per cent, healthcare 0.78 per cent and banking 0.77 per cent. On the other hand, metal index was up 1.17 per cent, followed by TECk 0.57 per cent, IT 0.43 per cent and infrastructure 0.31 per cent.

HDFC Bank Ltd , India's second-biggest private sector lender by assets, reported second-quarter results that met street estimates, but posted a higher-than-expected fall in net interest margins. The stock ended lower by 0.03 per cent after falling nearly 1 per cent earlier in the day.

Other lenders also fell, with ICICI Bank down 1.36 percent and State Bank of India lower 1.87 per cent.

Meanwhile, Cairn India shares ended up by +0.06 per cent at Rs 154.05 ahead of the company's July-September earnings due later in the day.

But Bajaj Auto bucked the trend, rising over 3.28 per cent after the company reported a 58 percent jump in quarterly net profit

Top five Sensex gainers were VEDL (+3.75%), Bajaj Auto (+3.28%), Bharti Airtel (+2.7%), Tata Steel (+1.66%) and NTPC (+1.64%), while the major losers were Dr Reddy's (-3.3%), SBIN (-1.87%), BHEL (-1.77%), GAIL (-1.5%) and L&T (-1.44%).

China stocks

China's share markets slumped 3.5 per cent, the worst daily performance in five weeks, as a correction in small caps deepened through the day.

But analysts said they expected the recent momentum in shares to continue should earnings come in better than expected.

Wipro, Idea Cellular and JSW Steel are among companies due to report their earnings later in the day.

"Quarterly results for the first two week are quite encouraging. Though it is quite early to predict, if this trend sustains, we are looking at good earnings season on our hand," HDFC said in an email to clients.

Broker's comment

A report by SMC Global said: "Asian stocks mostly advanced early Wednesday, with indices in Shanghai and Seoul hitting multi-month highs. Japan's Nikkei 225 index, meanwhile, appeared to be unaffected by September exports data, which slowed more than expected. Major US averages slipped overnight, with the Dow Jones Industrial Average snapping a three-day winning streak, amid a decline in healthcare and biotech names. US housing starts climbed 6.5 per cent to an annual rate of 1.206 million in September from the revised August estimate of 1.132 million. Economists had expected housing starts to rise to a rate of 1.147 million. The bigger than expected increase in housing starts reflected a jump in multi-family starts, which surged up 18.3 percent to a rate of 466,000 in September from 394,000 in August."

Indian markets will be closed on Thursday for a public holiday.

Global markets

European shares fell on Wednesday, with British education publisher Pearson slumping after warning on its earnings and top Swedish banks dropping after missing third-quarter earnings expectations.

The pan-European FTSEurofirst 300 index was down 0.4 per cent at 1,426.66 points by 0714 GMT after falling 0.5 per cent in the previous session.

Asian equities got off to a sluggish start on Wednesday as concerns about corporate earnings hobbled Wall Street while investors counted down to the European Central Bank's policy meeting later in the week.

MSCI's broadest index of Asia-Pacific shares outside Japan drifted off 0.07 per cent. Australian stocks lost 0.2 per cent as worries about China weighed on commodity prices.

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