Indian equity benchmarks ended lower on Thursday after having run up for the last four consecutive session, with frontline gauges tumbling below their crucial 59,700 (Sensex) and 17,750 (Nifty) levels on sustained selling by funds and retail investors. The domestic markets witnessed a gap-down opening and extended their losses as rising Coronavirus cases in the country sparked fears of renewed curbs to contain the spread of the virus which may impact the nascent economic growth in the country. The sentiments remained down-beat as ICRA Ratings warned that the third wave of the pandemic is likely to shave 40 bps of the fourth quarter Gross Domestic Product (GDP) growth that may print in at 4.5-5 per cent. It said third wave of the pandemic has seen a massive spike in infections after the more infectious Omicron variant of the coronavirus appeared. Frontline indices continued to trade in red terrain in afternoon deals, as traders remained cautious with report stating that the cost of debt-funds for the states has touched the highest level so far this fiscal with the weighted average cut-off crossing the 7.16 percentage points at the latest auctions, up 11 bps over the past week, reflecting the hardening yields even for the government securities. However, markets managed to cut some losses in late hour of trading session, as traders took some support with rating agency ICRA's repost that a focussed road map, including timely interventions by the government, is necessary for the country in order to achieve the net zero target by 2070. It calls for timely interventions by the government and large capex/investments in GHG (greenhouse gas) emitting sectors like power, industry and transport. Traders took note that Union Minister of Commerce & Industry, Consumer Affairs, Food & Public Distribution and Textiles, Piyush Goyal called for transparency and the highest level of integrity in the stock markets, adding that this will empower households to look at greater incomes through investment besides encourage foreign investors. Finally, the BSE Sensex fell 621.31 points or 1.03% to 59,601.84 and the CNX Nifty was down by 179.35 points or 1.00% to 17,745.90.

The US markets ended lower on Thursday, following the sell-off seen in the previous session, on uncertainty about the near-term outlook for the markets. Sentiments were cautious as the US trade deficit widened significantly in the month of November, according to a report released by the Commerce Department. The report said the trade deficit widened to $80.2 billion in November from a revised $67.2 billion in October. Street had expected the deficit to widen to $77.1 billion from the $67.1 billion originally reported for the previous month. The wider than expected trade deficit came as the value of imports spiked by 4.6 percent to $304.4 billion in November after jumping by 1 percent to $291.0 billion in October. Meanwhile, after reporting US service sector growth at a record high in the previous month, the Institute for Supply Management (ISM) released a report showing a notable slowdown in the pace of growth in the sector in the month of December. The ISM said its services PMI slid to 62.0 in December from 69.1 in November, although a reading above 50 still indicates growth. Street had expected the index to drop to 66.9. The pullback by the headline index came as the new orders index tumbled to 61.5 in December from 69.7 in November and the business activity index slumped to 67.6 from 74.6 in the previous month. The employment index also dipped to 54.9 in December from 56.5 in November, indicating a modest slowdown in the pace of job growth in the service sector.

Crude oil futures ended higher on Thursday, extending their previous sessions' gains, on escalating unrest in OPEC+ oil producer Kazakhstan and supply outages in Libya. Russia sent paratroopers into Kazakhstan on Thursday to help quell a countrywide uprising after deadly violence spread across the tightly controlled former Soviet state. Kazakhstan produces about 1.6 million barrels of oil per day. However, there are no indications that oil production has been hit so far. Meanwhile, as a result of disruptions due to pipeline maintenance work and oilfield shutdowns, oil output has dropped by over 500,000 barrels per day in Libya. Further, hopes that the Omicron variant of the coronavirus will not significantly impact global oil demand also contributed to the increase in prices. Benchmark crude oil futures for February delivery surged $1.61 or 2.1 percent to settle at $79.46 a barrel on the New York Mercantile Exchange. Brent crude for March delivery rose $1.2 or 1.5 percent to settle at $82.00 a barrel on London's Intercontinental Exchange.

Rupee ended weaker against dollar on account of continued dollar demand from importers and banks. Sentiments were fragile as minutes from the Federal Reserve meeting signal that the US central bank might hike interest rates faster than anticipated to cool inflation, and this could lead to outflows from the domestic markets. According to minutes from the Fed's December 14-15 policy meeting, policymakers believe the US job market is nearly healthy enough and ultra-low interest rates are no longer needed. Traders were also worried as ICRA Ratings warned that the third wave of the pandemic is likely to shave 40 bps of the fourth quarter Gross Domestic Product (GDP) growth that may print in at 4.5-5 per cent. It said third wave of the pandemic has seen a massive spike in infections after the more infectious Omicron variant of the coronavirus appeared. Downfall in equity markets also impacted traders' sentiments. On the global front, pound fell versus dollar and euro on Thursday, pulling back from some its recent gains in a dip driven by dollar strength following the release of more hawkish than expected Federal Reserve minutes. Finally, the rupee ended 74.42, weaker by 4 paise from its previous close of 74.38 on Wednesday.

The FIIs as per Thursday's data were net buyers in both equity and debt segments. In equity segment, the gross buying was of Rs 7620.66 crore against gross selling of Rs 7029.08 crore, while in the debt segment, the gross purchase was of Rs 306.44 crore with gross sales of Rs 114.36 crore. Besides, in the hybrid segment, the gross buying was of Rs 4.40 crore against gross selling of Rs 6.87 crore.

The US markets ended lower on Thursday as technology shares fell but financials lent support a day after the market sold off on a hawkish slant in Federal Reserve minutes. Asian markets are trading mostly in green on Friday despite losses on Wall Street. Indian markets broke a 4-day winning run to close a percent lower on Thursday. Today, the markets are likely to make cautious start amid mixed global cues. Rising coronavirus cases are likely to dampen sentiments in the markets. India reported 1,16,836 new COVID-19 cases on Thursday, the highest in over 200 days, taking India's caseload to 3,52,25,699, according to data released by the health bulletins of States and Union Territories. There will be some cautiousness as India Ratings and Research said the Omicron variant spread will impact the January-March quarter GDP by 0.40 per cent and shave off 0.10 per cent from the FY22 growth, as many states resort to restrictions to limit infections. It added curbs in various forms such as reducing the capacity of market/market complexes and night/weekend curfews to check human mobility/contact have already started in several states, which are impacting economic activities. Traders will be concerned with report that India is aiming for a fiscal deficit of 6.3 percent to 6.5 percent of gross domestic product for the next financial year, a less ambitious target than previously planned as COVID-19 infections threaten the economic recovery. However, some support may come later in the day as the finance ministry released monthly revenue deficit grant to 17 states totalling Rs 9,871 crore. So far, an amount of Rs 98,710 crore has been released to 17 states as post devolution revenue deficit grant in the current financial year. Traders may take note of report that amid fears that the new coronavirus variant may disrupt normal business activity, industry chamber CII pitched for coordinated actions by the Centre and state governments to minimize the impact of Omicron on the economy. Meanwhile, the commerce and industry ministry is making changes in the foreign direct investment (FDI) policy to facilitate disinvestment of the country's largest insurer LIC, after taking views from the finance ministry. Banking stocks will be in focus as rating agency Icra said the asset quality of the banking system, especially the restructured book, may face headwinds in the coming days as Covid-19 cases have started rising rapidly once again. There will be some reaction in insurance industry stocks as the regulator Irdai decided to set up two hubs on motor insurance and property insurance and also an advisory committee with the overall objective to promote loss prevention measures in the general insurance industry. Sugar industry stocks will be in limelight as trade body AISTA demanded respective state governments to allow truck movement 24X7 to increase the pace of export with maximum quantities of exportable sugar getting lifted from Maharashtra and Karnataka putting pressure on logistics.

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

Nifty Top volumes

• Reliance Industries' majority-owned subsidiary -- Jio Platforms has partnered with Zupee. 
• L&T's construction arm -- L&T construction has secured a slew of orders for the Water and Effluent Treatment Business from various prestigious clients. 
• SBI has reportedly invested $20 million in Pine Labs. 
• HDFC Bank has entered into MoU with Software Technology Parks of India's SPV -- AIC STPINEXT Initiatives.