The IMF said the Indian economy is set to grow 7.0 per cent in 2019 and 7.2 per cent the next year, a downward revision of 0.3 percentage point for both years, citing a weaker-than expected outlook for domestic demand.

At 10:11 am, the Sensex traded at 37,802.35, 180.39 points - or 0.47 per cent - lower from the previous close, while the Nifty was down 69.10 points - or 0.61 per cent - at 11,261.95.

Market breadth was sharply negative, with 615 stocks trading higher on the BSE and 1,112 struggling with losses. On the NSE, 521 stocks advanced while 1,087 declined.

Top percentage laggards on the 50-scrip index at the time were Eicher Motors, JSW Steel, BPCL, Bajaj Finane, Vedanta, Bajaj Finserv and Tata Steel, struggling with losses of between 1.79 per cent and 3.69 per cent.

Reliance Industries, ICICI Bank and TCS were the top drags on the Sensex.

Shares in Larsen & Toubro (L&T) fell as much as 1.31 per cent in intraday trade, a day after the industrial group reported a 20.46 per cent rise in net profit from continuing operations in the quarter ended June 30.

On the other hand, Hindustan Unilever shares gained 1.11 per cent to an intraday high of Rs 1,712.00 apiece on the BSE. After market hours on Tuesday, the FMCG major had reported a 14.85 per cent rise in net profit for the quarter ended June 30.

Meanwhile, equities in other Asian markets gave a guarded welcome to hints of progress in the US-China trade saga, with MSCI's broadest index of Asia-Pacific shares outside Japan gaining 0.4 per cent and Chinese blue chips climbing 1.2 per cent.

Japan's Nikkei added 0.5 per cent, while Australian stocks rose 0.8 per cent to all-time highs. Overnight on Wall Street, the Dow Jones industrial average, the S&P 500 and the Nasdaq ended 0.65 per cent, 0.68 per cent and 0.58 per cent higher respectively.