In volatile trading session, Indian equity benchmarks erased initial losses and ended in green terrain on Wednesday, amid continuous foreign fund inflows and a largely positive trend in global markets. Markets made a cautious start and traded lower for most part of the day, as traders got anxious with data showing that India's trade deficit widened to a record $31 billion in July with a sequential decline in exports and somewhat flat imports owing to growing recessionary trends in developed economies and elevated commodity prices. The data released by the commerce ministry showed merchandise exports declined to a five-month low at $35.2 billion in July while imports eased sequentially to $66 billion. Sentiments remained down-beat with a private survey showed growth in India's dominant services industry slowed sharply in July, squeezed by high inflationary pressures and weaker demand, leading to a further fall in business expectations. The S&P Global India Services Purchasing Managers' Index sank to 55.5 in July from 59.2 in June, its lowest since March. Some concerns also came after minister of state for finance Bhagwat K Karad said that the government is not planning to introduce any bill to make amendments to facilitate the privatisation of public sector banks in the ongoing monsoon session. However, markets trimmed all of their losses to end higher as exchange data showed foreign institutional investors (FIIs) remained net buyers in the capital markets as they bought shares worth Rs 825.18 crore on Tuesday. Some support also came with Centre for Monitoring Indian Economy (CMIE) data showing that the country's unemployment rate fell from 7.80 per cent in June to 6.80 per cent in July, the lowest level in the last six months, amid rising agriculture activities during monsoon. Adding to the optimism, Finance Minister Nirmala Sitharaman has asserted that there is no collapse of the unit and it is actually finding its natural course. She said the RBI is continuously monitoring the local currency and intervening only if there is volatility. Finally, the BSE Sensex rose 214.17 points or 0.37% to 58,350.53 and the CNX Nifty was up by 42.70 points or 0.25% to 17,388.15.

The US markets settled higher on Wednesday with Nasdaq ending around two and half percent higher. The rebound on markets partly reflected a positive reaction to some upbeat US economic data, which helped ease concerns about a recession. A report released by the Institute for Supply Management (ISM) showed an unexpected acceleration in the pace of growth in US services sector activity in the month of July. The ISM said its services PMI rose to 56.7 in July from 55.3 in June, with a reading above 50 indicating growth in the sector. The uptick came as a surprise to participants, who had expected the index to dip to 53.5. The unexpected increase by the services PMI came after the index edged down to its lowest reading since May 2020 in the previous month. A separate report from the Commerce Department showed a significant increase in new orders for US. manufactured goods in the month of June. The report showed factory orders shot up by 2.0 percent in June after surging by an upwardly revised 1.8 percent in May. Street had expected factory orders to advance by 1.1 percent compared to the 1.6 percent jump originally reported for the previous month. On the sectoral front, airline stocks moved sharply higher on the day, with the NYSE Arca Airline Index soaring by 3.9 percent to its best closing level in almost two months. Substantial strength was also visible among biotechnology stocks, as reflected by the 3.8 percent spike by the NYSE Arca Biotechnology Index. Semiconductor stocks also turned in a strong performance on the day, driving the Philadelphia Semiconductor Index up by 2.7 percent to a nearly two-month closing high.  

Crude oil futures ended sharply lower on Wednesday after data showed an unexpected surge in US crude inventories in the week ended July 29th. Data released by US Energy Information Administration (EIA) showed crude stockpiles in the US rose by 4.5 million barrels last week versus expectations for a draw of 630,000 barrels. Further, the dollar's strength after hawkish comments from a few Fed officials also weighed on oil prices. Meanwhile, traders also noted the decision by the Organization of the Petroleum Exporting Countries and allies, collectively called OPEC+, on output level. OPEC+ said that it would produce an additional 100,000 barrels a day in September. Benchmark crude oil futures for September delivery fell $3.76 or 4 percent to settle at $90.66 a barrel on the New York Mercantile Exchange. Brent crude for October delivery dropped $3.14 or 3.1 percent to settle at $97.40 a barrel on London's Intercontinental Exchange.

Erasing initial gains, Indian rupee ended weaker against dollar on Wednesday on account of sustained dollar demand from importers and banks. Sentiments were fragile with data showing that India's trade deficit widened to a record $31 billion in July with a sequential decline in exports and somewhat flat imports owing to growing recessionary trends in developed economies and elevated commodity prices. Traders were also worried after India's services sector lost momentum in July as demand was curtailed by competitive pressures, elevated inflation and unfavourable weather. The seasonally adjusted S&P Global India Services PMI Business Activity Index fell from 59.2 in June to 55.5 in July. On the global front, dollar edged lower on Wednesday but held on to most of the previous day's gains, after leaping on Federal Reserve officials' hints at aggressive rate hikes and drawing support amid a US-China flare-up over Taiwan. Finally, the rupee ended at 79.18 (provisional), weaker by 65 paisa from its previous close of 78.53 on Tuesday.

The FIIs as per Wednesday's data were net buyers in equity, while net sellers in debt segment. In equity segment, the gross buying was of Rs 7719.67 crore against gross selling of Rs 6057.15 crore, while in the debt segment, the gross purchase was of Rs 331.73 crore against gross selling of Rs 470.47 crore. Besides, in the hybrid segment, the gross buying was of Rs 2.14 crore against gross selling of Rs 241.58 crore.

The US markets ended higher on Wednesday with gains in big technology companies lifting the Nasdaq to near three-month highs as key readings on the services sector and new orders helped calm recession fears. Asian markets are trading mostly in green on Thursday taking cues from a strong rally on Wall Street after robust economic data and upbeat corporate guidance boosted investor appetite. Indian markets staged a fag-end recovery and closed in the green for the sixth straight session on Wednesday, with gains in IT shares, though losses in auto and FMCG stocks limited the upside. Today, the domestic markets are likely to make optimistic start mirroring firm global cues. Sentiments will get some support as the finance ministry released the fifth instalment of revenue deficit grant of Rs 7,183 crore to 14 states for the current fiscal. Traders may take note of a report that the Confederation of Indian Industry president Sanjiv Bajaj asked the Central government to contemplate reducing the personal income tax rates to spur economic activities. He also said the country's underlying growth drivers are strong and the economy would grow in the range of 7.4 per cent to 8.2 per cent in the next fiscal. Besides, the government plans to facilitate easier financing norms to activities pertaining to the manufacturing and services hubs envisaged under the proposed revamped law for Special Economic Zones (SEZs), also known as Development (Enterprise and Services) Hub Bill, 2022. Meanwhile, SEBI has restructured its advisory committee on market data that recommends policy measures pertaining to securities market data access and privacy. However, there may be some cautiousness as the government data showed that India's foreign direct investment to gross domestic product ratio eased to 2.7% in fiscal year ending March. 31, 2022 from 3.1% in the previous financial year. Insurance companies stocks will be in focus as the insurance regulator has proposed to put limits on expenses of management (EoM) of life insurers, wherein they have said that the expenses of the companies should not exceed an amount computed on the basis of percentages in respect of various segments of business written during a financial year. There will be some buzz in sugar industry stocks as the Cabinet hiked the fair and remunerative price (FRP) of sugarcane for the 2022-23 season, which starts from October, by Rs 15 per quintal to Rs 305, triggering calls from sugar mills for a commensurate rise in the minimum sale price (MSP) of sugar to keep their businesses competitive. Railways stocks will be in limelight as Indian Railways transported 122.14 million tonnes (mt) freight in July, marking an 8.25 per cent increase against the same period last year as it ferries coal to power plants. There will be some result announcements to keep the markets in action.

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

Nifty Top volumes

• ITC has completely moved out from lifestyle retailing business following a strategic review of the business portfolio. 
• Tata Motors has launched the Tiago NRG XT variant at Rs 6.42 lakh, in line with its New Forever philosophy and celebrating the first anniversary of Tiago NRG. 
• Axis Bank has entered into agreement for subscribing to 8,921 equity shares of face value of Rs 10 each for Rs 55 crore to be issued by Equentia SCF Technologies.
• IOC is aiming to replace at least a tenth of its current fossil-fuel-based hydrogen at its refineries with carbon-free green hydrogen as part of a decarbonization drive.