Indian equity benchmarks remained volatile on the weekly expiry day and lost nearly half a percent on Thursday as investors remained on the sidelines ahead of the US inflation data announcement. Key gauges made a negative start and stayed in red for whole day, amid the Reserve Bank of India's monetary policy decision, weak global cues, and weekly F&O expiry. The Reserve Bank of India (RBI) has decided to keep policy rate unchanged for third time in a row as it maintains heightened vigil on inflation. The rate increase cycle was paused in April after six consecutive rate hikes aggregating to 250 basis points since May 2022. It also directed banks to maintain incremental cash reserve ratio (ICRR) at 10 per cent, August 12 onwards, in order to reduce liquidity from the system. Besides, it increased FY24 inflation forecast to 5.4 per cent from 5.1 per cent, discounting near-term risks. Weakness continued over the Dalal Street in late afternoon deals as traders also remained cautious with a private report that the rate of price rise for the consumer basket likely breached the central bank's upper tolerance level of 6 per cent in July. Traders paid no heed towards data showing that Foreign Institutional Investors (FIIs) turned buyers on Wednesday after continuous offloading of equities for the past several days. They bought equities worth Rs 644.11 crore on Wednesday. Traders also overlooked Securities and Exchange Board of India's (SEBI) annual report for the financial year 2022-23 revealing that over 400 new foreign portfolio investors (FPIs) joined the Indian markets in the last financial year. According to the data, the number of FPIs operating in India increased to 11,081 from 10,608 in FY22. Finally, the BSE Sensex fell 307.63 points or 0.47% to 65,688.18 and the CNX Nifty was down by 89.45 points or 0.46% to 19,543.10.

The US markets ended marginally higher on Thursday after the Labor Department released a report showing the annual rate of consumer price inflation accelerated by slightly less than expected in the month of July. The report said the annual rate of growth by consumer prices accelerated to 3.2 percent in July from 3.0 percent in June, while street had expected the pace of price growth to accelerate to 3.3 percent. The Labor Department also said its consumer price index rose by 0.2 percent on a monthly basis in July, matching the uptick seen in June as well as expectations. Excluding food and energy prices, core consumer prices also rose by 0.2 percent for the second straight month in July, in line with estimates. Meanwhile, the annual rate of growth by core consumer prices slowed to 4.7 percent in July from 4.8 percent in June. The rate of growth was expected to be unchanged. On the sectoral front, Despite the pullback by the broader markets, networking stocks saw continued strength, with the NYSE Arca Networking Index climbing by 1.9 percent after ending Wednesday's trading at its lowest closing level in well over two months. Telecom stocks also held on to notable gains, driving the NYSE Arca North American Telecom Index up by 1.0 percent to a three-month closing high. On the other hand, housing stocks came under pressure over the course of the session, dragging the Philadelphia Housing Sector Index down by 1.2 percent.

Crude oil futures ended lower on Thursday amid concerns about the outlook for oil demand from China. The latest data from China showed crude oil imports fell 2.412 million barrels per day month-on-month to a sixth-month low of 10.429 million barrels. Meanwhile, data showing consumer price inflation in the U.S. accelerated less than expected in the month of July raised hopes the Federal Reserve will likely hold interest rates unchanged at its September meeting. Benchmark crude oil futures for September delivery fell $1.58 or about 1.87 percent to settle at $82.82 a barrel on the New York Mercantile Exchange. Brent crude for October delivery dropped $1.15 or 1.3 percent to settle at $86.40 a barrel on London's Intercontinental Exchange.

Indian rupee appreciated against the dollar on Thursday after the Reserve Bank left its key interest rates unchanged. The Reserve Bank of India (RBI) has decided to keep policy rate unchanged for third time in a row as it maintains heightened vigil on inflation. The rate increase cycle was paused in April after six consecutive rate hikes aggregating to 250 basis points since May 2022. It also directed banks to maintain incremental cash reserve ratio (ICRR) at 10 per cent, August 12 onwards, in order to reduce liquidity from the system. On the global front, rouble weakened on Thursday, heading back towards a more than 16-month low against the dollar following a slight pause in its depreciation trend after the Bank of Russia had intervened in the FX market to try and stabilise its currency. Finally, the rupee ended at 82.66 (Provisional), stronger by 19 paise from its previous close of 82.85 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 9345.68 crore against gross selling of Rs 8348.74 crore, while in the debt segment, the gross purchase was of Rs 1323.11 crore with gross sales of Rs 131.77 crore. Besides, in the hybrid segment, the gross buying was of Rs 31.91 crore against gross selling of Rs 34.47 crore.

The US markets ended higher on Thursday after the Labor Department released a report showing the annual rate of consumer price inflation accelerated by slightly less than expected in the month of July. Asian markets are trading mixed on Friday on the back of a retreat in U.S. bond yields and the dollar index. Indian markets fell around half a percent each on Thursday after the RBI left its benchmark interest rates unchanged. Today, markets are likely to get flat-to-negative start amid mixed cues from the global markets. Investors are likely to remain on sidelines ahead of Index of Industrial Production (IIP) data to be out later in the day. Besides, concerns over high inflation and 10 per cent incremental CRR from August 12 onwards for banks, weigh on the investors' sentiment. Traders will be concerned with private report that India's headline retail inflation is expected to have crashed past the upper bound of the Reserve Bank of India's (RBI) 2-6 percent tolerance band in July on its way to a nine-month high due to a surge in vegetable prices. However, some support will come as finance minister Nirmala Sitharaman said while the global economy is struggling, India is uniquely positioned to be optimistic and positive about its future growth. The minister highlighted that India is the fastest-growing economy despite disruptions due to the pandemic. Meanwhile, Reserve Bank Governor Shaktikanta Das has said the move to impose a 10 per cent incremental cash reserve ratio for a limited period will help suck out Rs 1 lakh crore of excess liquidity from the system. The move, announced along with the bi-monthly policy review, was the best option under the current circumstances and there is enough liquidity in the system for the banks to continue their lending operations. Moreover, Capital markets regulator Sebi has proposed to increase the threshold to at least Rs 500 crore from the current Rs 100 crore for the outstanding long-term borrowings for identifying any entity as Large Corporates (LC).

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

Nifty Top volumes

• Axis Bank has received approval from the Acquisitions, divestments and merger committee of the Board of Directors of the Bank to infuse Rs 1,612 crore in Max Life through preferential allotment.
• Adani Enterprises' wholly owned subsidiary -- ADSTL has incorporated a 100% subsidiary company namely Atharva Advanced Systems and Technologies on August 09, 2023. 
• Bharti Airtel's arm -- Airtel Payments Bank has launched eco-friendly debit card for its new and existing customers with a savings bank account.   
• Dr. Reddy's Laboratories has launched Saxagliptin and Metformin Hydrochloride Extended-Release Tablets in the U.S. market.