In the highly volatile session, Indian equity benchmarks erased losses in the last few minutes of the session and ended flat with a positive bias on Wednesday, amid fag-end buying ahead of Fed outcome. After making a cautious start, key gauges witnessed a sharp fall as traders got anxious with data showing that India's retail inflation based on the Consumer Price Index (CPI) rose to a three-month high of 5.55 per cent in November 2023 on firming food prices, including vegetables and cereals. Though it remains within the Reserve Bank of India's (RBI's) comfort zone of less than 6 per cent. Some concern came with former RBI Governor Raghuram G Ranjan's statement that Indian economy, dubbed the fastest growing major economy in the world, is faced with the single most important pressure point of job creation. Some pessimism also came amid a private report stating that India's inflation quickened for the first time in four months, while manufacturing production surged more than forecast, giving the central bank reason to keep interest rates higher for longer. However, markets recovered sharply in second half to end with marginal gains as traders found some solace with better-than-expected growth in the October Industrial Production data. India's industrial production hit a 16-month high in October, aided by a favourable base effect. Overnight sharp fall in crude oil prices also helped the markets. Some support also came with Finance Minister Nirmala Sitahraman's statement that the economy is moving in the right direction, and India has become the fastest-growing major economy in the world. Some optimism also came with Services Export Promotion Council (SEPC) stating that the country's services exports have touched $192 billion so far this fiscal and are expected to reach $400 billion by the end of 2023-24. Sectors like tourism, hospitality, and medical value tourism which suffered due to COVID-19 are now showing revival signs. In addition to this, sectors like legal, auditing, higher education, accounting, and logistics are showing good growth. Finally, the BSE Sensex rose 33.57 points or 0.05% to 69,584.60 and the CNX Nifty was up by 19.95 points or 0.10% to 20,926.35.

The US markets ended sharply higher on Wednesday after the Fed announced its widely expected decision to leave interest rates unchanged while also confirming plans to pivot to cutting rates next year. In support of its dual goals of maximum employment and inflation at the rate of 2 percent over the longer run, the Fed said it decided to maintain the target range for the federal funds rate at 5.25 to 5.50 percent. The accompanying statement said the decision came as economic growth has slowed from its strong pace in the third quarter, while inflation has eased over the past year. The projections provided by the Fed also suggest the central bank will begin cutting rates next year, with the median forecast indicating rates will be lowered to 4.6 percent by the end of 2024. The median forecast points to rates in a range of 4.50 to 4.75 percent, hinting the Fed plans to cut rates by 25 basis points three times next year. On the sectoral front, Gold stocks showed a substantial move back to the upside following recent weakness, resulting in a 6.4 percent spike by the NYSE Arca Gold Bugs Index. The rally by gold stocks comes as the price of the precious metal soared in electronic trading on the heels of the Fed announcement. Considerable strength was also visible among biotechnology stocks, with the NYSE Arca Biotechnology Index surging by 4.3 percent to its best closing level in over three months. Banking, commercial real estate and utilities stocks also showed particularly strong moves to the upside following the Fed announcement.

Crude oil futures ended higher on Wednesday after data showed a bigger than expected drop in U.S. crude inventories in the week ended December 8. Data released by Energy Information Administration (EIA) showed crude oil inventories in the U.S. dropped by 4.3 million barrels last week, as against an expected declined of about 0.7 million barrels. Meanwhile, Gasoline inventories increased by 0.4 million barrels, while distillate fuel stockpiles increased by 1.5 million barrels. Benchmark crude oil futures for January delivery rose $0.86 or about 1.3 percent to settle at $69.47 a barrel on the New York Mercantile Exchange. Brent crude for February delivery surged $1.02 or about 1.39 percent to settle at $74.26 a barrel on London's Intercontinental Exchange.

Indian Rupee ended lower against the US dollar on Wednesday amid a strong American currency overseas. Traders were worried as India's retail inflation based on the Consumer Price Index (CPI) rose to a three-month high of 5.55 per cent in November 2023 on firming food prices, including vegetables and cereals. Traders overlooked report that India's industrial production growth jumped to a 16-month high of 11.7 per cent in October 2023 compared to the same month of the previous year. On the global front, dollar ticked up slightly on Wednesday as traders prepared for the conclusion of a Federal Reserve policy meeting that could offer some insight into when the U.S. central bank will begin lowering interest rates. Finally, the rupee ended at 83.42 (Provisional), weaker by 5 paise from its previous close of 83.37 on Tuesday.

The FIIs as per Wednesday's data were net buyers in both equity and debt segments. In equity segment, the gross buying was of Rs 17039.37 crore against gross selling of Rs 14451.29 crore, while in the debt segment, the gross purchase was of Rs 1495.34 crore with gross sales of Rs 873.52 crore. Besides, in the hybrid segment, the gross buying was of Rs 68.47 crore against gross selling of Rs 43.55 crore.

The US markets ended higher on Wednesday, after Fed signals three rate cuts in 2024. Asian markets are trading mostly in green on Thursday joining a global rally in stocks and bonds on signs the Federal Reserve will cut rates next year, reigniting a bullish pulse across markets. Indian markets recovered from day's losses and ended slightly higher on Wednesday on account of value buying in the second half of the session. Today, markets are likely to get gap-up opening following a global equity rally after a clear signal to an end to the rate hiking cycle, the US Fed stayed put on rates last night and penciled in at least 3 rate cuts next year. Domestically, investors will be eyeing inflation numbers based on wholesale price index (WPI) to be out later in the day for more directional cues. Foreign fund inflows likely to aid sentiments. Provisional data from the National Stock Exchange (NSE) showed that foreign institutional investors (FIIs) net bought shares worth Rs 4,711 crore on December 13. Sentiments will get a boost as Asia Development Bank (ADB) said India's economy would grow 6.7 per cent in Financial Year 2023-24 (FY24), raising the estimate from 6.3 per cent it made in September. The lender revised its estimate based on India's higher-than-expected gross domestic product (GDP) growth, of 7.6 per cent, in the second quarter of FY24. Some support will come as Commerce and Industry Minister Piyush Goyal said foreign investors should explore business opportunities in India as it provides a huge domestic market and investment-friendly environment. He added the availability of skilled manpower, equal treatment to all investors, and the aspirational young population are also some of the key reasons for investing in India. Meanwhile, the government has introduced a bill in Parliament, which seeks to give immediate effect to the changes in customs and excise duties announced in the Budget. Finance Minister Nirmala Sitharaman, while introducing the Provisional Collection of Taxes Bill, 2023, in the Lok Sabha said the provisions are curbing speculative activities following changes in customs and excise duties in the Budget. Banking stocks will be in focus as global rating agency Standard & Poor's (S&P) said the credit-deposit ratio of the Indian banks may come under pressure on the prospects of continued lag of deposit growth vis-a-vis the pace of credit expansion. The trailing of deposit growth and competition for funds may dent the net interest margins to 2.9 per cent in 2025 from 3.0 per cent in FY24.

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

Nifty Top volumes

• UPL has been included in Dow Jones Sustainability World and Emerging Markets Indices.
• HDFC Life Insurance Company has launched a new product - HDFC Life Click 2 Achieve, a guaranteed savings life insurance plan.
• Sun Pharmaceutical Industries' specialty product Ilumetri has been included in category B of China's national reimbursement drug list.
• Tech Mahindra has launched Populii, a crowdsourcing platform that enables gig workers to collaborate with leading organisations through micro jobs requiring human-in-the-loop services.