The benchmark BSE Sensex was trading marginally lower as participants tightened their exposure ahead of exit poll results for Gujarat Assembly elections later in the day.

Domestic sentiment was also hit due to weak macroeconomic data. Annual wholesale price inflation accelerated in November to an eight-month high due to faster increase in the prices of food and fuel products.

Also, retail inflation in November breached the central bank's medium-term target of 4 percent, which could put pressure on it to raise policy rates in 2018, while the country's annual industrial output grew a lower-than-expected 2.2 percent in October.

At 2.00 p.m., the 30-share BSE index Sensex was dwon 38.89 points or 0.12 per cent at 33,014.15 and the 50-share NSE index Nifty was down 10.05 points or 0.1 per cent at 10,182.90.

Among BSE sectoral indices, consumer durables fell 0.88 per cent, followed by power 0.78 per cent, infrastructure 0.72 per cent and IT 0.61 per cent. On the other hand, oil & gas index was up 0.39 per cent, banking 0.26 per cent, healthcare 0.2 per cent and auto 0.02 per cent.

Top five Sensex gainers were Dr Reddy's (+1.91%), M&M (+1.18%), Cipla (+1.18%), Lupin (+1.00%) and NTPC (+0.75%), while the major losers were TCS (-3.22%), PowerGrid (-0.87%), Wipro (-0.85%), Adani Ports (-0.69%) and L&T (-0.66%).

Gujarat exit polls

Votes from the election in the western Indian state of Gujarat will be counted on December 18 and the results announced the same day, but markets were on edge ahead of exit polls due later on Thursday that usually indicate the likely winner ahead of official results.

Prime Minister Narendra Modi's government is hoping a big win in the state would bolster the ruling Bharatiya Janata Party's electoral prospects ahead of general elections in 2019.

“The markets will react to the Fed hike news, but investors are jittery ahead of the exit polls from Gujarat elections," said Siddhartha Khemka, head of research (retail) at Motilal Oswal Securities.

“With the latest macro-economic data and ahead of the election results, shares will remain volatile.”

The Nifty volatility index, a barometer of investor fear, hit its highest level since February 1 on Thursday.

Early trade

The Sensex rose 116.70 points or 0.35 per cent to 33,169.74 on value-buying and the Nifty gained 37.70 points or 0.36 per cent to 10,230.65. The Sensex had lost 402.75 in the previous two sessions due to grim economic data and lowering of India’s economic growth forecast by the Asian Development Bank.

Asian shares

Asian stocks edged higher on Thursday after the Federal Reserve delivered a much-anticipated interest rate hike but flagged caution about inflation, tempering expectations for future tightening, which weighed on the dollar and Treasury yields. China's central bank also raised rates, though marginally. While Chinese shares were slightly lower, the wider impact was limited.

The Fed's less hawkish statements supported MSCI's broadest index of Asia-Pacific shares outside Japan, which rose 0.45 per cent. Shanghai shares and the Chinese yuan were marginally lower after the Peoples' Bank of China hiked the reverse repo rate by 5 basis points to 2.50 per cent and raised the one-year medium-term lending facility (MLF) rate by 5 basis points to 3.25 per cent.

(With inputs from Reuters)