Sensex volatile ahead of Fed decision; Nov WPI at 5-mth low

It further said corporates and banks are likely to face short-term downside risk as the demonetisation-induced cash crunch will curtail GDP growth.

"Indian government reforms will have long-term structural benefits, but carry short-term execution and adjustment risks," S&P Global Ratings Credit Analyst Abhishek Dangra said in an article titled India's Demonetization And the GST: Short-term Pain For Long-term Gain, published today.

The rating agency recently revised downwards its estimated economic growth rate for 2016-17 by one full percentage point to 6.9 per cent to reflect the disruption caused by the surprise move of demonetisation.

It said the government's decision to cancel the legal tender status of high-value rupee notes has caused a significant physical cash crunch.

12:25 pm IPOs: The government will shortly submit draft red herring prospectus for IPOs of three companies - Cochin Shipyard, HUDCO and HAL, reports CNBC-TV18 quoting Reuters.12:18 pm M&A deals in Nov: Corporate India's M&A activity witnessed a 16 percent decline in November at USD 2.06 billion, largely owing to absence of big ticket deals compared to the year-ago period, says a survey.

According to assurance, tax and advisory firm Grant Thornton, the overall M&A market in November saw a 16 per cent fall in deal value and 7 per cent decline in volume.

There were 43 M&A transactions worth USD 2.06 billion in November this year, while in the corresponding period last year there were 46 deals worth USD 2.46 billion.

"This was primarily due to muted cross border deal values as compared to November 2015, which witnessed five big ticket cross border deals valued over USD 100 million, while this month witnessed only one," the report said.

According to Prashant Mehra Partner at Grant Thornton India LLP, as the impact of demonetisation is yet to be seen, and the fate of GST is currently in a wait and watch situation, the developments may have a short term impact on deal closures.Also read - Buy, sell, hold: 11 key stocks that analysts are watching out12:00 pm Market Check

Indian equities continued to trade in a tight range as investors awaited the decision of two-day Federal Reserve meeting due tonight. It is the first meeting of the FOMC after US elections.

The 30-share BSE Sensex was down 21.22 points at 26676.60 and the 50-share NSE Nifty declined 12.90 points to 8208.90.

Eswar Prasad, Professor Of Economics at Cornell University believes that rate hike by US Federal Reserve is very much on the cards because inflationary pressures are beginning to creep up in the US economy. Wage growth too has picked up with a strong performance of the labour market, says Prasad.

With the new Donald Trump administration taking office in January, and uncertain about the policies they will adopt, the overall picture is a bit clouded, says Prasad.

Wholesale price index inflation in November stood at 3.15 percent against 3.39 percent in previous month but it was higher compared to CNBC-TV18 poll of 2.8 percent.

Asian shares flip-flopped with markets cautious ahead of what is expected to be the Federal Reserve's first rate hike in a year, with comments on the outlook key.