Indian equity benchmarks carried forward yesterday's gains and settled over 2 percent higher on Wednesday, tracking recovery in global indices. After the flat start, the benchmarks inched gradually higher as the day progressed and settled closer to the day's high. Sentiments remained positive as the Reserve Bank of India (RBI) has extended the interest equalisation scheme for pre and post shipment rupee credit for Ministry of Small and Medium Enterprises (MSME) exporters till March 2024 with the objective of boosting outbound shipments.  Traders took support with report that the Agriculture Ministry is ready with a new central scheme to promote natural farming in the country with an estimated outlay of Rs 2,500 crore. The proposed new scheme on natural farming will soon be placed before the Cabinet for approval. Frontline indices continued to trade higher in late afternoon deals, taking support from Finance Minister Nirmala Sitharaman's statement that the Union budget for 2022-23 was about the philosophy of Atmanirbhar Bharat (self-reliant Bharat) as customs duties were increased on those imported products which are also manufactured in India so that people buy the Indian equivalent. However, duties have not been increased on the products produced within the country. Adding to the optimism, Prime Minister Shri Narendra Modi has approved the setting up National Land Monetization Corporation (NLMC) as a wholly owned Government of India company. With monetization of non-core assets, Government would be able to generate substantial revenues by monetizing unused and under-used assets. Traders overlooked rating agency Icra's report in which it has warned of serious downside risks to the economy in next fiscal (FY23) with runaway current account deficit, steep fall in the rupee and a hardening yields on government bonds, as a result of the Russian-Ukraine crisis and the resultant spike in crude and other commodity prices. Finally, the BSE Sensex rose 1223.24 points or 2.29% to 54,647.33 and the CNX Nifty was up by 331.90 points or 2.07% to 16,345.35.

The US markets ended sharply higher on Wednesday, after closing lower for many sessions, as recently surging commodity prices, especially oil, cooled off while the war in Ukraine continues.  Silver, copper and platinum were all lower. Wheat futures were sharply lower, though palladium continued its march higher. The markets also benefited from bargain hunting, as traders looked to pick up stocks at reduced levels following the recent weakness. Meanwhile, Treasury prices fell and yields climbed as investors rotated out of bonds after huddling in fixed income for protection amid the Ukraine war. The benchmark 10-year note yield rose about 5 basis points to 1.93%. A basis point equals 0.01%. On the sectoral front, a continued jump in treasury yields also contributed to substantial strength among financial stocks, with the KBW Bank Index and the NYSE Arca Broker/Dealer Index surging by 4.2 percent and 4.4 percent, respectively. Chemical stocks also moved sharply higher over the course of the session, resulting in a 4 percent spike by the S&P Chemical Sector Index. The index rebounded after ending the previous session at a one-year closing low. Semiconductor, housing and biotechnology stocks also saw considerable strength on the day, while energy and gold stocks pulled back along with commodities prices.

Crude oil futures settled deeply in red on Wednesday giving back some of the rally this month amid supply disruptions stemming from Russia's invasion of Ukraine. The move in oil lower came amid indications of possible progress by the US in encouraging more oil production from other sources. A private report stated that Iraq said it could increase output if OPEC+ asks. Secretary of State Antony Blinken also signaled that UAE would support increased production by OPEC+. However, data from US Energy Information Administration showed crude inventories in the US dropped by 1.9 million barrels in the week ended March 4. The data said gasoline stockpiles fell 1.4 million barrels last week, while distillate stockpiles dropped by 5.2 million barrels. Benchmark crude oil futures for April delivery dropped $15 or 12.1 percent to settle at $108.70 a barrel on the New York Mercantile Exchange. Brent crude for May delivery declined $16.8 or 13 percent to settle at $111.1 a barrel on London's Intercontinental Exchange.

Indian rupee ended substantially stronger on fresh selling of American currency by banks and exporters. Besides, retreat in crude oil prices and rebound in domestic equities also supported rupee. Sentiments were upbeat as rebound in risk assets and expectations of inflows in bond markets as global fund houses exclude the Russian debt from bond indices. In another positive development, RBI has extended the interest equalisation scheme for pre and post shipment rupee credit for MSME exporters till March 2024 with the objective of boosting outbound shipments. On the global front, euro and other European currencies edged up on Wednesday ahead of this week's central bank meeting and supported by reports that the European Union was discussing joint bond issuance to finance energy and defence spending. Finally, the rupee ended at 76.62 (Provisional), stronger by 38 paise from its previous close of 77.00 on Tuesday.

The FIIs as per Wednesday's data were net sellers in both equity and debt segment. In equity segment, the gross buying was of Rs 9079.87 crore against gross selling of Rs 16376.28 crore, in the debt segment, the gross purchase was of Rs 150.10 crore against gross selling of Rs 531.87 crore. Besides, in the hybrid segment, the gross buying was of Rs 5.13 crore against gross selling of Rs 12.52 crore.

The US markets ended higher on Wednesday after Ukrainian President Volodymyr Zelenskiy said the country is ready to hold a dialogue with Russia on security guarantees and the future of Donetsk, Lugansk and Crimea. Asian markets are trading mostly in green on Thursday following overnight gains on Wall Street. Indian markets extended gains for the second day on Wednesday on buying seen across sectors barring metals. Today, the markets are likely to extend their previous session's gains with gap-up opening amid firm global cues. The key event of the day, which could lend direction to the markets is the state election results of Uttar Pradesh, Punjab, Goa, Mizoram and Uttarakhand. Investors may react positively to the results if they come in line with the exit polls that projected the ruling BJP to win in the key state of UP. Traders may take note of report that former RBI governor Raghuram Rajan has said India needs to recalibrate its response to the price situation following disruptions in global supply chains on account of Russia-Ukraine war, as losing the battle against inflation neither serves the government nor the central bank. Meanwhile, Union Finance Minister Nirmala Sitharaman has said the GST compensation cess period has already been extended till March 2026 to enable the Centre to repay loans taken to compensate all states for the year 2020. However, traders may be concerned with India Ratings and Research's (Ind-Ra) statement that the country's current account deficit (CAD) is likely to widen to a 13-quarter high of $23.6 billion or 2.8 per cent of GDP in October-December 2021-22 due to higher commodity prices following the Russia-Ukraine conflict. There may be some cautiousness as S&P Global Ratings said rising oil prices may dampen economic growth and cause a sizeable current account deficit (CAD) in large energy-importing countries like India. The ratings agency retained India's economic growth at 7.8 per cent for FY23. There will be some reaction in defence industry stocks as Niti Aayog member V K Saraswat said India's defence sector will not face any problems because of the western sanctions on Russia as Moscow has an inherent military strength and is self-sufficient in its production capabilities.

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

Nifty Top volumes

• TCS is planning to revamp the organisation structure to align with customers more closely, as it aims to achieve $50 billion (about Rs 3.89 lakh crore) revenue by 2030. 
• HDFC has raised Rs 10,000 crore through 10-year bonds carrying a coupon of 7.18 per cent.  
• L&T's construction arm -- L&T construction has won a significant order from the prestigious DMRC, to design and construct the Underground Metro Project of Phase-IV of Delhi MRTS. 
• Bharti Airtel has entered into an agreement resulting into acquisition of aggregate 9.01% equity stake in Avaada CleanTN Project.