Equity benchmarks gave up early gains and ended lower, extending losses for third straight day. Selling in major sectors such as banks and FMCG weighed on the indices. The rupee hovering near its record low spooked investors.

The Sensex fell 169.45 points or 0.45% to settle at 37,121.22, its lowest closing level since 26 July 2018. The index rose 239.96 points, or 0.64% at the day's high of 37,530.63. The index fell 227.98 points, or 0.61% at the day's low of 37,062.69.

The Nifty 50 index fell 44.55 points or 0.39% to settle at 11,234.35, its lowest closing level since 26 July 2018. The index rose 53.15 points, or 0.47% at the day's high of 11,332.05. The index fell 68 points, or 0.60% at the day's low of 11,210.90.

Among secondary barometers, the BSE Mid-Cap index fell 0.72%. The BSE Small-Cap index fell 0.98%. Both these indices underperformed the Sensex.

The market breadth, indicating the overall health of the market, was weak. On BSE, 968 shares rose and 1704 shares fell. A total of 173 shares were unchanged.

Among the sectoral indices on BSE, the S&P BSE Metal index (up 1.25%), the S&P BSE Oil & Gas index (up 0.98%), the S&P BSE Basic Materials index (up 0.20%), the S&P BSE IT index (up 0.15%), the S&P BSE Energy index (up 0.14%), the S&P BSE Teck index (up 0.07%), the S&P BSE Capital Goods index (down 0.06%), the S&P BSE Industrials index (down 0.16%), the S&P BSE Utilities index (down 0.32%) and the S&P BSE Auto index (down 0.42%), outperformed the Sensex. The S&P BSE Telecom index fell 0.45%, matching the Sensex fall in percentage terms. The S&P BSE Bankex (down 0.51%), the S&P BSE Power index (down 0.52%), the S&P BSE Healthcare index (down 0.59%), the S&P BSE Consumer Durables index (down 0.8%), the S&P BSE Consumer Discretionary Goods & Services index (down 0.82%), the S&P BSE Realty index (down 0.96%), the S&P BSE Finance index (down 1.01%) and the S&P BSE FMCG index (down 1.09%), underperformed the Sensex.

Shares of asset management companies slumped on fears of the impact on their revenue and profitability after the Securities and Exchange Board of India (Sebi) reduced the total expense ratio.

HDFC Asset Management Company declined 8.55% to Rs 1,408.55. Reliance Nippon Life Asset Management slumped 11.28% to Rs 190.

Sebi on Tuesday capped the total expense ratio (TER) for fund houses with equity assets up to Rs 50000 crore at 1.05%, down from as much as 1.75% charged earlier. AMCs with lower assets under management (AUM) will be allowed to charge a higher TER, based on slabs. Sebi also said the industry would have to move to a full “trail model” for commissions. It also capped fees for exchange-traded funds (ETFs) at a maximum of 1%.

FMCG shares declined. Jyothy Laboratories (down 4.37%), Godrej Consumer Products (down 4.11%), Britannia Industries (down 1.72%), Procter & Gamble Hygiene & Health Care (down 1.3%), Nestle India (down 1.28%), Bajaj Corp (down 1.02%), Hindustan Unilever (down 0.97%), Dabur India (down 0.8%), Tata Global Beverages (down 0.28%) and Colgate Palmolive (India) (down 0.04%), edged lower. GlaxoSmithKline Consumer Healthcare (up 0.11%) and Marico (up 0.12%), edged higher.

Most metal shares rose. JSW Steel (up 2.43%), Steel Authority of India (up 1.58%), Jindal Steel & Power (up 1.39%), Tata Steel (up 1.31%), National Aluminium Company (up 0.81%), Hindalco Industries (up 0.66%) and Hindustan Zinc (up 0.13%), edged higher. Vedanta (down 0.04%), Hindustan Copper (down 0.49%) and NMDC (down 0.63%), edged lower.

Most banks shares declined. Among private sector banks, IndusInd Bank (down 3.03%), HDFC Bank (down 1.58%), Yes Bank (down 1.44%), RBL Bank (down 0.81%), Federal Bank (down 0.33%) and City Union Bank (down 0.31%), edged lower. Axis Bank (up 0.12%) and Kotak Mahindra Bank (up 0.31%), edged higher.

ICICI Bank rose 0.67%. The bank clarified after market hours yesterday, 18 September 2018, that it has not filed any application for settlement but only a response to the show-cause notice has been submitted to Securities and Exchange Board of India (Sebi). The clarification was issued after Sebi chairman reportedly stated that ICICI Bank filed a consent petition with Sebi.

Among public sector banks, Vijaya Bank (down 6.56%), UCO Bank (down 5.8%), Dena Bank (down 4.45%), Punjab & Sind Bank (down 3.51%), Bank of Maharashtra (down 2.58%), United Bank of India (down 2.5%), Corporation Bank (down 2.3%), Indian Bank (down 1.09%), State Bank of India (down 0.95%), Syndicate Bank (down 0.81%), Allahabad Bank (down 0.5%) and Canara Bank (down 0.18%), edged lower. Andhra Bank (up 0.49%), Bank of India (up 0.50%), Central Bank of India (up 1.06%), IDBI Bank (up 1.33%), Bank of Baroda (up 2.51%) and Union Bank of India (up 4.54%), edged higher.

Sun Pharmaceutical Industries rose 0.78%. The company announced that Almirall has received the European Commission (EC) approval for Ilumetri (tildrakizumab) for the treatment of adults with moderate-to-severe chronic plaque psoriasis who are candidates for systemic therapy. As indicated by Almirall, roll out of Ilumetri in Europe will start in the next few weeks. In July 2016, Sun Pharma out-licensed tildrakizumab to Almirall, for the development and commercialization of the product for psoriasis in Europe. The announcement was made after market hours yesterday, 18 September 2018.

In the foreign exchange market, the rupee edged higher against the dollar. The partially convertible rupee was hovering at 72.575, compared with its close of 72.9775 during the previous trading session.

Overseas, European shares were trading higher with investors appearing to brush off escalating trade tensions between the US and China.

Asian stocks rose across the board on Wednesday as expectations that Beijing would implement stimulus to soften the economic blow from the Sino-US trade war helped Chinese shares rally.

China announced tariffs targeting more than 5,000 US products, worth about $60 billion, will go into effect on 24 September 2018. However, China will put a 10% tariff on some goods it had previously earmarked for a 20% levy. At the same time, China's commerce ministry said that it filed a complaint to the World Trade Organization (WTO) against the US.

Beijing's announcement came after the Trump administration said the US will impose 10% tariffs on $200 billion worth of Chinese imports, and those duties will rise to 25% at the end of the year.

US stocks came off earlier highs but still closed higher on Tuesday as investors shrugged off escalating trade tensions to instead focus on the robust economy.

In the global commodities markets, Brent for November 2018 settlement was down 14 cents at $78.89 a barrel. The contract had fallen 98 cents, or 1.24% to settle at $78.05 a barrel during the previous trading session.