Key indices drifted lower in early trade on negative Asian stocks. At 9:18 IST, the barometer index, the S&P BSE Sensex, was down 43.03 points or 0.11% at 39,773.45. The Nifty 50 index was down 6.45 points or 0.05% at 11,903.85.

Investors are awaiting the Union Budget, which will be presented by Finance Minister Nirmala Sitharaman on Friday, 5 July 2019. After presenting the interim budget in February 2019, the Modi government will present its full-year budget 2019-20. The government is likely to amend several policies and schemes for delivering growth to the biggest drivers of the economy, including farmers, middle class, and the corporate sector.

The S&P BSE Mid-Cap index was up 0.03%. The S&P BSE Small-Cap index was up 0.06%. Both these indices outperformed the Sensex.

The market breadth, indicating the overall health of the market, was positive. On the BSE, 429 shares rose and 341 shares fell. A total of 36 shares were unchanged.

Overseas, Asian stocks were trading lower on Wednesday as global trade concerns weighed on investor sentiment.

US stocks managed modest gains on Tuesday as enthusiasm over the US-China trade truce faded after the United States threatened tariffs on additional European goods.

Meanwhile US President Donald Trump's administration on Monday threatened to impose tariffs on $4 billion of additional European Union goods in a long-running dispute over aircraft subsidies. The new wave of proposed duties comes amid a 15-year dispute at the World Trade Organization over aircraft subsidies given to U.S. aerospace manufacturer Boeing and its European rival, Airbus.

Back home, Kalpataru Power Transmission (KPTL) gained 2.36%. KPTL signed a definitive agreement with Tano India Private Equity Fund II (Tano) to acquire 19.94% stake in Shree Shubham Logistics (SSL) for Rs 64.66 crore. The consideration will be paid through a non-cash equity swap transaction, in which 12,54,900 equity shares of KPTL will be issued to Tano at the value of Rs 515.25 per share. The announcement was made after market hours yesterday, 2 July 2019.

UCO Bank fell 0.83%. UCO Bank announced that the Reserve Bank of India (RBI) has imposed a penalty of Rs 50 lakh on the bank for non-compliance of RBI directives on KYC Norms/AML Standards/CFT/Obligation of banks and financial institutions under PMLA 2002 and also on opening of current accounts by banks. The announcement was made after market hours yesterday, 2 July 2019.

Allahabad Bank lost 2.14%. Allahabad Bank announced that the Reserve Bank of India (RBI) has imposed a penalty of Rs 50 lakh on the bank for non compliance of the directions issued by RBI on Know Your Customer (KYC) norms/ Anti Money Laundering (AML) Standards and opening of current accounts. The announcement was made after market hours yesterday, 2 July 2019.

Aditya Birla Fashion and Retail rose 0.28%. Aditya Birla Fashion and Retail said that the company has approved completion of acquisition of the business undertakings of Jaypore and TG Apparel. Jaypore is a B2B entity which sells ethnic fashion merchandise under its own brand 'Jaypore' and of other third-party brands; and TG Apparel is a B2C entity which retails ethnic fashion, both online and offline. The announcement was made after market hours yesterday, 2 July 2019.

Graphite India dropped 2.69% after the company announced that the Karnataka State Government has granted permission to close the Bengaluru plant in Whitefield. The announcement was made after market hours yesterday, 2 July 2019. On 3 April 2019, Graphite India had informed about the decision of the board of directors of the company to permanently close operations in the Bengaluru plant in Whitefield.

Indiabulls Ventures rose 0.07%. Indiabulls Ventures said that Indiabulls Consumer Finance, a wholly owned subsidiary of the company, has disbursed 9.2 lakh loans, during the quarter ended 30 June 2019 as compared to 4.9 lakh loans during the quarter ended 31 March 2019 and 0.6 lac loans during the quarter ended 30 June 2018. The announcement was made after market hours yesterday, 2 July 2019.