Indian equity markets roiled under global pressure on Wednesday and lost over a percent as rating agency Fitch downgraded credit rating of the US to AA+ from AAA. Markets made a gap down opening and continued to drift lower throughout the day as traders were concerned amid foreign fund outflows. According to the provisional data available on the NSE, foreign institutional investors (FII) sold shares worth net Rs 92.85 crore on August 1. Sentiments remained down-beat with report stating that India's services trade surplus fell to $36.4 billion in the April-June quarter of 2023-24, the lowest in three quarters, as services export growth slowed down amid the economic downturn in developed economies.  Anxiety remained among traders with reports that the central government's debt stood at Rs 155.6 lakh crore or 57.1 per cent of the GDP at the end of March 2023. However, key indices managed to trim some losses in late afternoon deals, as traders took some support with the finance ministry's statement that Gross Goods and Services Tax (GST) collection rose 11 per cent to over Rs 1.65 lakh crore in July 2023 compared to the same month last year, crossing the Rs 1.6 lakh crore mark for the fifth time since the rollout of the indirect tax regime. Some support also came with Union Minister of State for Finance Bhagwat Kisanrao Karad's statement that the growth of deposits and advances of public sector banks (PSBs) has improved from 8.2% and 9.8% in FY2021-22 to 9.3% and 15.8% in FY2022-23, respectively. He stated that the PSBs take all commercial and business-related decisions as per their board approved policies. Finally, the BSE Sensex fell 676.53 points or 1.02% to 65,782.78 and the CNX Nifty was down by 207.00 points or 1.05% to 19,526.55.

The US markets ended lower on Wednesday, with Nasdaq settling lower over two percent, after credit rating agency Fitch Ratings unexpectedly downgraded the United States' credit rating. Fitch downgraded the U.S. long-term foreign-currency issuer default rating to AA+ from AAA, citing a steady deterioration in standards of governance over the last 20 years. Fitch said the repeated debt-limit political standoffs and last-minute resolutions have eroded confidence in fiscal management. On the sectoral front, Semiconductor stocks showed a substantial move to the downside on the day, resulting in a 3.8 percent nosedive by the Philadelphia Semiconductor Index. Significant weakness was also visible among software stocks, as reflected by the 3.0 percent plunge by the Dow Jones U.S. Software Index. Gold stocks also saw considerable weakness amid a modest decrease by the price of the precious metal, dragging the Arca Gold Bugs Index down by 2.8 percent. Steel, computer hardware, oil and retail stocks also showed notable moves to the downside, moving lower along with most of the other major sectors. On the economic data front, payroll processor ADP released a report showing U.S. private sector employment jumped by much more than expected in the month of July. ADP said private sector employment shot up by 324,000 jobs in July after surging by a downwardly revised 455,000 jobs in June. Street had expected private sector employment to increase by 189,000 jobs compared to the spike of 497,000 jobs originally reported for the previous month.

Crude oil futures ended lower on Wednesday on concerns about outlook for demand. Oil prices rose despite data from the Energy Information Administration (EIA) showed crude inventory in the U.S. dropped by 17.049 million barrels in the week ended July 28, substantially larger than an expected drop of just about 1.37 million barrels. The EIA data also showed gasoline inventory rose by 1.480 million barrels last week, while distillate stockpiles dropped by 0.796 million barrels. The EIA also said U.S. crude oil refinery inputs averaged 16.5 million barrels per day during the week ending July 28, up 0.04 million barrels more than the previous week's average. Benchmark crude oil futures for September delivery fell $0.88 or about 2.3 percent to settle at $79.49 a barrel on the New York Mercantile Exchange. Brent crude for October delivery dropped $1.71 or 2 percent to settle at $83.20 a barrel on London's Intercontinental Exchange.

Indian rupee weakened against the US dollar on Wednesday amid weak domestic equities and elevated crude prices in international markets. There is also downside pressure on the local unit due to foreign fund outflows. Traders were worried as Fitch Ratings has downgraded the United States' long-term foreign currency issuer default rating to AA+ from AAA, citing expected fiscal deterioration over the next three years, along with an erosion of governance and a growing general debt burden.  On the global front, the dollar barely budged on Wednesday as investors shrugged off Fitch's U.S. credit rating downgrade, while the yen made up ground as traders assessed the Bank of Japan's approach to monetary policy. Finally, the rupee ended at 82.58 (Provisional), weaker by 36 paise from its previous close of 82.22 on Tuesday.

The FIIs as per Wednesday's data were net buyers in both equity and debt segments. In equity segment, the gross buying was of Rs 8703.05 crore against gross selling of Rs 8677.40 crore, while in the debt segment, the gross purchase was of Rs 1348.51 crore with gross sales of Rs 304.02 crore. Besides, in the hybrid segment, the gross buying was of Rs 24.83 crore against gross selling of Rs 11.15 crore.

The US markets ended lower on Wednesday as investors sentiment remained muted post the Fitch credit rating downgrade. Asian markets are trading mostly in red on Thursday following overnight losses on Wall Street. Indian markets fell sharply on Wednesday, mirroring weak cues from global markets as data showing a slowdown in global manufacturing activity in July. Today, markets are likely to start session in green amid despite negative moves across global markets. Investors will be eyeing Services PMI data to be out later in the day. Some support will come as keeping in view India's vision of becoming Atmanirbhar, production-linked incentive (PLI) schemes for 14 key sectors have been announced with an outlay of Rs 1.97 trillion to enhance India's manufacturing capabilities and exports. Traders will be taking encouragement with report that India and the UK are close to concluding negotiations for a proposed free trade agreement (FTA), chief negotiators of both countries will hold the 12th round of talks from August 7. Both sides are looking at concluding the talks before the end of the year. Besides, the Securities and Exchange Board of India (Sebi) could soften its previous proposal of imposing a standard investor fee on mutual funds. The market regulator is considering a revised discussion paper, which is likely to be released in the coming weeks, with two options. There will be some buzz in gaming industry stocks as softening its stance, the Goods and Services Tax (GST) Council has decided to implement a 28 per cent tax on electronic gaming, casinos, and horse racing, but this would be applied on the initial amount paid upon entry, and not on the total value of each bet placed. The proposed amendments are likely to be introduced from October 1, with a comprehensive review to be conducted six months after implementation. Sugar stocks will be in focus as the industry body ISMA said the country's sugar production is pegged lower by 3.41 per cent to 316.80 lakh tonnes in the new season that will begin from October 2023, due to more diversion of cane for ethanol production. There will be some reaction in edible oil industry stocks with a private report that India's edible oil imports in July rose to a record 1.76 million metric tonnes as refiners built up stocks for upcoming festivals given uncertainty over supplies from the Black Sea. Meanwhile, India Inc's April-June quarterly results will hog limelight. Companies like Sun Pharma, Adani Enterprises, Bharti Airtel, Lupin, and Zomato are some of the prominent names that will report the June quarter results.

Support and Resistance: NSE (Nifty) and BSE (Sensex)

Nifty Top volumes

• Hero MotoCorp has unveiled new pricing of the Harley-Davidson X440. 
• Adani Ports and Special Economic Zone has recorded bumper cargo volumes of 34 MMT in July, 2023, which is a good 7% Year- on -Year jump.
• UltraTech Cement has commissioned 1.2 mtpa Brownfield cement capacity at Magdalla, Gujarat, taking the Unit's capacity to 1.93 mtpa.
• Titan Company has reported 4.30% marginal fall in consolidated net profit at Rs 756 crore for Q1FY24 as compared to Rs 790 crore for the same quarter in the previous year.