Extending their previous day's fall, Indian equity benchmarks ended lower by around half a percent on Wednesday due to weak trends in the US and Asian markets.  After the gap-down start, markets further drifted lower in the first half as provisional data from the National Stock Exchange (NSE) showed that foreign institutional investors (FII) offloaded shares worth Rs 2,034.14 crore on October 3. Traders were also concerned as the World Bank increased its retail inflation forecast for India for 2023-24 to 5.9 per cent from the 5.2 per cent estimate made in April. Traders remained cautious as Engineering Exports Promotion Council (EEPC) stated that overall exports of engineering goods from the country have been affected by the global slowdown. It said during April to August in 2023, overall engineering exports dropped 4.55 per cent to $44.62 billion as against $ 46.74 billion in the previous similar period of 2022.  Weak trade continued over the Dalal Street in afternoon deals, as sentiments remained down-beat after Crisil Ratings indicated that while rating upgrades continue to outnumber the downgrades substantially due to robust domestic demand and government capital expenditure from April to September 2023, sluggish exports are beginning to add pressures to the credit quality of some Indian firms. It also said export-oriented sectors such as textiles (cotton spinning) and diamond polishing might experience a contraction in operating cash flows. However, key indices managed to trim some losses in late afternoon deals, as traders took some support with the Reserve Bank of India's (RBI) monthly data report on India's International Trade in services showing that India's services exports surged 8.4% year-on-year to $28,719 million in August 2023, while imports of services during August 2023 fell 0.8% to $15,103 million. Finally, the BSE Sensex fell 286.06 points or 0.44% to 65,226.04 and the CNX Nifty was down by 92.65 points or 0.47% to 19,436.10.

The US markets ended higher on Wednesday as yields finished the day firmly in negative territory, giving back ground after reaching their highest levels in sixteen years. Treasury yields closed lower following the release of a report from payroll processor ADP showing private sector job growth slowed by much more than expected in the month of September. ADP said private sector employment rose by 89,000 jobs in September after climbing by an upwardly revised 180,000 jobs in August. Street had expected private sector employment to advance by 153,000 jobs compared to the addition of 177,000 jobs originally reported for the previous month. The increase in September reflected the slowest pace of job growth since January 2021, when private employers shed jobs. Meanwhile, the Institute for Supply Management (ISM) released a separate report showing a modest slowdown in the pace of growth in U.S. service sector activity in the month of September. The ISM said its services PMI edged down to 53.6 in September from 54.5 in August, although a reading above 50 still indicates growth. The modest decrease matched participants estimates. On the sectoral front, airline stocks moved sharply higher over the course of the session, with the NYSE Arca Airline Index soaring by 2.7 percent after ending the previous session at a nine-month closing low. Significant strength also emerged among housing stocks, as reflected by the 1.6 percent gain posted by the Philadelphia Housing Sector Index. The index bounced off its lowest closing level in almost four months.

Crude oil futures ended sharply lower with cut of over five percent on Wednesday amid worries about an economic slowdown and reports saying Russia will likely lift its diesel ban sometime soon. Crude oil fell despite data released by U.S. Energy Information Administration (EIA) showed crude inventories in the U.S. fell by 2.224 million barrels last week, falling for a third straight week. Crude inventories were expected to see a modest increase of 0.05 million barrels. Meanwhile, the data showed gasoline stockpiles surged nearly 6.5 million barrels last week, substantially higher than an expected increase of about 200,000 barrels. Distillate stockpiles fell by 1.269 million barrels, as against expectations for a 0.068 million drop. Benchmark crude oil futures for November delivery fell $5.01 or about 5.6 percent to settle at $84.22 a barrel on the New York Mercantile Exchange. Brent crude for December delivery dropped $5.11 or about 5.62 percent to settle at $85.81 a barrel on London's Intercontinental Exchange.

Indian rupee ended lower against dollar on Wednesday as a muted trend in domestic equities and sustained foreign fund outflows weighed on investor sentiments. Traders were concerned as the World Bank increased its retail inflation forecast for India for 2023-24 to 5.9 per cent from the 5.2 per cent estimate made in April. Investors paid no heed towards the Reserve Bank of India's (RBI) monthly data report on India's International Trade in services showing that India's services exports surged 8.4% year-on-year to $28,719 million in August 2023, while imports of services during August 2023 fell 0.8% to $15,103 million. On the global front, the rouble steadied on Wednesday, trading close to the 100 level against the dollar it breached in the previous session, with the market waiting to see whether Russian authorities intervene. Finally, the rupee ended at 83.24 (Provisional), weaker by 4 paise from its previous close of 83.20 on Tuesday.

The FIIs as per Wednesday's data were net sellers in equity segment, while they were buyers in debt segment. In equity segment, the gross buying was of Rs 11640.59 crore against gross selling of Rs 12476.65 crore, while in the debt segment, the gross purchase was of Rs 1956.22 crore with gross sales of Rs 557.79 crore. Besides, in the hybrid segment, the gross buying was of Rs 54.84 crore against gross selling of Rs 70.20 crore.

The US markets ended higher on Wednesday aided by a pullback in treasury yields from multi-year highs after a survey showed 89,000 private jobs were added in Sept, way below the 160,000 estimate. Asian markets are trading in green on Thursday tracking overnight gains on Wall Street. Indian markets witnessed heavy selling pressure and ended off lows on Wednesday as US Treasury yields hit fresh 16-year highs, but buying in IT and FMCG stocks limit the losses. Today, start of the session is likely to be in green as global shares recover from a spate of losses coupled with sharp fall in crude oil prices. Investors will be eyeing the Services PMI data to be out later in the day for more directional cues. Traders will be taking encouragement as Finance Secretary T V Somanathan said India's retail inflation is likely to ease by December as seasonal factors become more favourable. India's retail inflation remained above the upper end of the central bank's 2%-6% tolerance band for a second consecutive month in August, though it eased from a 15-month high of 7.44% in July. Some support will come with a private report that the much-awaited India-UK Free Trade Agreement (FTA) is set to be signed by both countries by month-end, with all outstanding issues having been resolved. Traders may take note of report that the Centre has increased the subsidy to Rs 300 per cylinder from Rs 200, paid to poor women who got cooking gas connections under the Pradhan Mantri Ujjwala Yojana. However, foreign fund outflows likely to dent sentiments. Provisional data from the National Stock Exchange (NSE) showed that foreign institutional investors (FII) offloaded shares worth Rs 4,424.02 crore on October 4. Some cautiousness may come as Petroleum and Natural Gas Minister Hardeep Singh Puri warned of organised chaos if crude oil starts selling at over $100 per barrel. Defence stocks will be in limelight as the government released the fifth Positive Indigenisation List (PIL) of 98 items which will be procured by the three armed services from indigenous suppliers in a staggered manner. There will be some buzz in auto stocks with a private report that the Indian automobile sector has the potential to become an export-led $1 trillion industry by 2035. Infrastructure related stocks will be in focus as Road Transport and Highways secretary Anurag Jain said around 85 per cent of road projects are likely to be completed by the end of this fiscal, as the steps taken by the government to ensure faster clearances like monitoring and quicker resolution of issues have started showing results.

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

Nifty Top volumes

• HCL Technologies has entered into an agreement with Business Finland to drive innovation and growth in areas of generative AI, metaverse, space and quantum technologies. 
• IndusInd Bank has introduced a hyper-personalized financial super-app named INDIE. 
• UPL has incorporated Step-Down wholly owned subsidiary viz. UPL Lanka Bio (Private) in Sri Lanka.
• NTPC has reported an 83 per cent growth in coal production from its captive mines during the first half of the financial year 2023-24.