Indian equity benchmarks gave up their early gains and ended lower by over half percent on Wednesday as investors turned cautious ahead of the key US retail inflation data due later tonight.  Benchmark indices made optimistic start and stayed in green in first half of trading session, as traders took encouragement with the government data showed that India's factory output measured by the Index of Industrial Production (IIP) posted a robust growth of 19.6 per cent in May 2022, sharply higher from 7.1 per cent recorded in the previous month. Also, India's retail inflation eased marginally to 7.01 per cent in June from 7.04 per cent in the previous month helped by softening crude and edible oil prices. Traders took note of report that Finance minister Nirmala Sitharaman has asserted that the pointed attack on inflation will need to continue, and that she has been monitoring price pressure item by item, as elevated inflation ultimately crimps growth. However, key gauges entered into negative terrain in the afternoon session, as investor sentiments got hit a with a private report that the country's current account deficit is likely to touch $105 billion or 3 per cent of the GDP this fiscal, mainly due to continuously widening trade deficit. Some concern also came after private report lowered its India gross domestic product growth projection for 2023 by 70 basis points from 5.4% to 4.7% as economic recovery faces several headwinds.  Adding to the pessimism, domestic rating agency ICRA in its latest report has said that rising bond yields will force banks to report Mark-To-Market (MTM) losses of up to Rs 13,000 crore on their investment portfolios in the April-June quarter (Q1FY23). Finally, the BSE Sensex fell 372.46 points or 0.69% to 53,514.15 and the CNX Nifty was down by 91.65 points or 0.57% to 15,966.65.

The US markets ended in red on Wednesday, magnifying their recent session's losses as a Labor Department report showing a bigger than expected increase in US consumer prices added to concerns about the outlook for interest rates. The Labor Department said its consumer price index shot up by 1.3 percent in June after jumping by 1.0 percent in May. Street had expected consumer prices to leap by 1.1 percent. With the bigger than expected monthly surge, the annual rate of consumer price growth accelerated to 9.1 percent in June, reflecting the biggest increase since November 1981. Street had expected the annual rate of consumer price growth to accelerate to 8.8 percent in June from 8.6 percent in May. Excluding increases in prices for food and energy, core consumer prices advanced by 0.7 percent in June after climbing by 0.6 percent in May. Core prices were expected to rise by another 0.6 percent. While the annual rate of core consumer price growth slowed to 5.9 percent in June from 6.0 percent in May, the rate of growth was expected to decelerate to 5.7 percent. The bigger than expected jump in consumer prices has solidified expectations the Federal Reserve will raise interest rates by 75 basis points later this month and increases the likelihood of another 75 basis point rate hike in September. Traders continued to express concerns the Fed's aggressive fight to contain elevated inflation will inadvertently push the economy into a recession. On the sectoral front, Considerable strength emerged among steel stocks, as reflected by the 1.5 percent gain posted by the NYSE Arca Steel Index. However, banking stocks showed a significant move to the downside on the day, dragging the KBW Bank Index down by 1.5 percent.

Crude oil futures ended higher on Wednesday despite a sharp rise in US inflation, and data showing an increase in US crude inventories last week. Data released by US Energy Information Administration showed crude inventories rose by 3.254 million barrels in the week ended July 8, against expectations for a drop of 154,000 barrels. Gasoline stockpiles rose by 5.825 million barrels last week, while forecasts were for a drop of 357,000 barrels. Meanwhile, distillate stockpiles increased 2.668 million barrels, against forecast for a rise of 1.591 million barrels. Meanwhile, data from the US Labor Department showed that the consumer price index shot up by 1.3% in June after jumping by 1% in May. Street had expected consumer prices to leap by 1.1%. Benchmark crude oil futures for August delivery gained $0.46 or 0.48 percent to settle at $96.3 a barrel on the New York Mercantile Exchange. Brent crude for September delivery added $0.08 or 0.08 percent to settle at $99.57 a barrel on London's Intercontinental Exchange.

Indian rupee ended weaker against dollar on Wednesday, on emergence of demand for the greenback from importers. Traders were worried amid a private report that the country's current account deficit is likely to touch $105 billion or 3 per cent of the GDP this fiscal, mainly due to continuously widening trade deficit. Some concern also came after private report lowered its India gross domestic product growth projection for 2023 by 70 basis points from 5.4% to 4.7% as economic recovery faces several headwinds. However, downfall remain capped as government data showed that India's factory output measured by the Index of Industrial Production (IIP) posted a robust growth of 19.6 per cent in May 2022, sharply higher from 7.1 per cent recorded in the previous month. On the global front, euro edged higher, hovering just above parity with the dollar on Wednesday while traders focused on U.S. data due later in the session that is expected to show inflation at a 40-year high. Finally, the rupee ended at 79.62 (provisional), weaker by 3 paisa from its previous close of 79.59 on Tuesday.

The FIIs as per Wednesday's data were net sellers in equity segment, while net buyers in debt segments. In equity segment, the gross buying was of Rs 4664.52 crore against gross selling of Rs 6121.81 crore, while in the debt segment, the gross purchase was of Rs 290.41 crore against gross selling of Rs 211.39 crore. Besides, in the hybrid segment, the gross buying was of Rs 1.53 crore against gross selling of Rs 18.15 crore.

The US markets ended lower on Wednesday after investors digested hotter-than-expected US inflation data, which fuelled fears that the Fed could raise key interest rates by as much as 100 basis points later this month. Asian market are trading mixed on Thursday following a weak session on Wall Street overnight. Indian markets reversed initial gains to finish lower for a third straight day on Wednesday, as caution persisted across global markets ahead of a key inflation reading from the world's largest economy. Today, markets are likely to make cautious start amid lackluster global cues. Investors will closely monitor macro data - wholesale inflation figures for the month of June. There will be some cautiousness as India was ranked low at 135th place in terms of gender parity, despite an improvement of five places since last year on better performance in areas of economic participation and opportunity. On India, the WEF said its gender gap score recorded its seventh-highest level in the last 16 years, but it continues to rank among the worst performers on various parameters. Traders will be concerned with continues FII selling. Foreign Institutional Investors (FII) were net sellers once again on Wednesday. FIIs pulled out Rs 2,839 crore from domestic markets. However, some support may come as a private report stated that Indian economy is projected to grow 7.1-7.6 per cent in the current financial year despite shifting geopolitical realities across the world. There will be some reaction in edible oil industry stocks as industry body Solvent Extractors Association (SEA) said India's palm oil imports rose marginally to 5,90,921 tonnes in June this year, but the shipment of RBD palmolein oil showed a sharp increase. Auto stocks will be in focus as the latest data released by the Society of Indian Automobile Manufacturers (SIAM), Passenger vehicle wholesales in India rose by 19 per cent year-on-year in June on the back of improvement in semiconductor supplies. The data showed passenger vehicle (PV) dispatches to dealers stood at 275,788 units last month against 231,633 units in June 2021. Corporate earnings for June quarter 2022 (Q1FY23) will continue to determine investor sentiments. ACC, L&T Infotech, Tata Elxsi will report Q1 numbers on Thursday, July 14.

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

Nifty Top volumes

• Tata Motors has launched Nexon EV Prime priced between Rs 14.99 lakh and Rs 17.5 lakh (ex-showroom).
• HCL Technologies through wholly owned step-down subsidiary has completed the acquisition of entire stake in Quest Informatics incorporated in India (Quest). 
• Tata Consultancy Services has launched Pace Port Toronto to help Canadian companies bring digital innovations to life faster. 
• HDFC Bank and NIIT Institute of Finance, Banking and Insurance have entered into a strategic partnership to build new age Digital Talent for the banking industry.