Indian equity benchmarks staged strong recovery from intraday low levels to close on a flat note on Wednesday. The benchmarks fell soon after opening higher, as traders turned cautious with Trade Promotion Council of India (TPCI) stating that increasing container freights would push the overall cost of domestic goods in the international markets, which would make it less competitive and hurt the country's merchandise exports. Selling further crept in as Rating agency Moody's said that the asset quality risks for banks will rise in most parts of ASEAN and India, as the region battles new waves of coronavirus infections amid low vaccination rates. Sentiments remained fragile as report of ICRA stated that the fresh rupee denominated bond issuances witnessed a sharp decline of 45 per cent to Rs 1.3 lakh crore in Q1 FY2022 on a YoY and a QoQ basis (Rs 2.3 lakh crore each in Q4 FY2021 and Q1 FY2021). Some concern also came as analysis by Care Ratings stating that as more and more states continue to borrow less from the markets, cost of their market borrowing fell by 11 bps to a two-month low of 6.87 per cent at Tuesday's auction when eight states drew down just Rs 12,100 crore. However, buying interest in metal, power and energy stocks helped benchmarks recover from intraday low levels. Traders found some support with provisional commerce ministry data showing that the country's exports rose by 50.45 per cent to $7.41 billion during August 1-7, on account of healthy growth in the shipments of engineering goods, gems and jewellery as well as petroleum products. Some optimism also came as Union Minister of State for Finance Pankaj Chaudhary has said that the Government is taking effective measures to curb inflation especially food inflation keeping in view of the condition of the people suffering from coronavirus pandemic situation in the country. Market participants also took note of the finance ministry's latest Monthly Economic Review stated that the economic impact of the second wave of the COVID-19 pandemic is likely to be muted and there are visible signs of economic rejuvenation. It also said the recent sero-prevalence results signify that India can reduce the likelihood of severe illness due to COVID-19 if the country sustains the momentum of the vaccination programme. Finally, the BSE Sensex fell 28.73 points or 0.05% to 54,525.93, while the CNX Nifty was up by 2.15 points or 0.01% to 16,282.25.   

The US markets ended mostly higher on Wednesday with the Dow and the S&P 500 reaching new record closing highs. The mixed performance on markets came after the Labor Department's highly anticipated reading on consumer price inflation was not bad as some had feared. The Labor Department said its consumer price index climbed by 0.5 percent in July after jumping by 0.9 percent in June. The increase in consumer prices, which came following the biggest jump in thirteen years in the previous month, matched street estimates. Compared to the same month a year ago, consumer prices in July were up by 5.4 percent, unchanged from the annual rate of growth seen in June. The pace of growth was expected to dip to 5.3 percent .Excluding higher food and energy prices, core consumer prices rose by 0.3 percent in July after surging by 0.9 percent in June. Street had expected core prices to increase by 0.4 percent. The annual rate of growth in core prices slowed to 4.3 percent in July from 4.5 percent in June, matching street estimates. While the pace of core consumer price growth remains well above the Federal Reserve's 2 percent target, traders viewed the modest slowdown as a sign the central bank will not be in a hurry to scale back stimulus. The Fed's asset purchase program has helped prop up the markets throughout much of the coronavirus pandemic, making traders wary of any signs of potential tapering.

Crude oil futures ended higher on Wednesday, extending their previous session's gains, after the Biden administration said it would not ask US oil producers to hike output. Traders also digested data showing a smaller than expected drop in US crude inventories in the week ended August 6. Data released by US Energy Information Administration (EIA) showed crude inventories in the country dipped by 400,000 barrels last week, much smaller than an expected decline of about 1.3 million barrels. Gasoline inventories dropped by 1.4 million barrels last week versus an an expected drop of 2.4 million barrels, while distillate stockpiles increased by 1.8 million barrels compared to an expected drop of 600,000 barrels. Crude oil futures for September rose $0.96 or 1.4 percent to settle $69.25 barrel on the New York Mercantile Exchange. October Brent crude surged $0.84 or 1.2 percent to settle at $71.47 a barrel on London's Intercontinental Exchange.

Indian rupee ended weaker against US dollar on Wednesday, on increased demand for the greenback from importers and banks. Traders were worried as ICRA stated that the fresh rupee denominated bond issuances witnessed a sharp decline of 45 per cent to Rs 1.3 lakh crore in Q1 FY2022 on a YoY and a QoQ basis (Rs 2.3 lakh crore each in Q4 FY2021 and Q1 FY2021). However, downside remained capped as Union Minister of State for Finance Pankaj Chaudhary has said that the Government is taking effective measures to curb inflation especially food inflation keeping in view of the condition of the people suffering from coronavirus pandemic situation in the country. On the global front, dollar headed towards this year's high against the euro on Wednesday and struck a five-week peak against the yen ahead of U.S. inflation data, with a strong number potentially pressuring the Federal Reserve to wind back policy support. Finally, the rupee ended 74.44, weaker by 1 paise from its previous close of 74.43 on Tuesday.

The FIIs as per Wednesday's data were net seller in both equity and debt segment. In equity segment, the gross buying was of Rs 6693.77 crore against gross selling of Rs 6773.92 crore, while in the debt segment, the gross purchase was of Rs 100.36 crore against gross selling of Rs 424.70 crore. Besides, in the hybrid segment, the gross buying was of Rs 88.28 crore against gross selling of Rs 88.75 crore.

The US markets ended mostly higher on Wednesday after inflation jumped less than investors feared when stripping out volatile food and energy prices. Asian markets are trading mixed on Thursday with fears about the spread of the Delta variant of the coronavirus weighing on sentiment. Indian markets rebounded from intra-day lows in the dying hour of trade to close flat. Today, the start of session is likely to be positive amid mixed global cues and ahead of macro-economic data. On the data front, Industrial production for June and CPI inflation for August will be released today. High volatility could also be on cards amid the weekly F&O expiry. Traders will be taking encouragement as Commerce Secretary BVR Subrahmanyam said the country's merchandise exports are expected to touch $1 trillion by 2027-28 and the government has laid down a road map, including district as an export hub scheme, to achieve that number. This fiscal, the commerce ministry is aiming at $419 billion of exports and for that a detailed analysis has been carried out and the target was disaggregated at the level of country, commodity, region, and states across 31 commodity groups. Some support will come as days after the Centre withdrew the retrospective tax amendments that led to international arbitration, Revenue Secretary Tarun Bajaj said it was the government's policy to provide a stable and predictable tax regime. He added that robust tax revenues in the first quarter of the current fiscal were encouraging but urged industry to revive the animal spirit as far as private investment is concerned. Traders may take note of Commerce and Industry Secretary BVR Subrahmanyam's statement that India will fast-track free trade agreements (FTAs) with at least six nations - including the UAE, the UK, Australia, Canada, and the EU - over the next few months, in line with its revamped foreign trade strategy. The earliest one may be inked with the UAE. Besides, State Health Minister Rajesh Tope said all restaurants and shopping malls in Maharashtra will be allowed to operate till 10 pm on all days of the week from August 15. The restaurants can function at 50 percent capacity, while only people who have been vaccinated with both doses of a COVID-19 vaccine will be allowed inside shopping malls. However, there may be some cautiousness as India recorded 43,641 new Covid-19 cases and 519 deaths in the past 24 hours, taking its tally to 32,076,974 and the death toll to 429,702. Meanwhile, Today is the last day to subscribe to Chemplast Sanmar and Aptus Value Housing Finance IPOs. Chemplast Sanmar was subscribed 26 per cent, while Aptus Value Housing Finance issue saw 37 per cent subscription on the second day of the bidding process. Aptus Value Housing entirely an offer for sale by selling shareholders.

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

Nifty Top volumes

• Tech Mahindra is planning to start trials for a COVID drug in the next three to four months after receiving the patent for a particular molecule. 
• Power Grid Corporation of India has reported 3-fold jump in consolidated net profit at Rs 5998.28 crore for Q1FY22 as compared to net profit of Rs 2048.42 crore for Q1FY21 .
• M&M is recalling 29,878 units of its pick up vehicles to replace faulty fluid pipe amid suspicion of improper assembly.
• L&T has declared the divestment of 100% stake in the 3 x 33 MW (99 MW) run of the river hydroelectric power plant owned by its subsidiary LTUHPL to Renew Power Services, a wholly owned subsidiary of Renew Power.