Indian equity benchmarks ended in green on Wednesday tracking gains mainly in IT, TECK and Capital Goods stocks. The benchmarks opened lower taking cues from weak Asian markets. Traders remained cautious with rising coronavirus cases in the country. India has recorded a spike of 40,215 fresh Covid-19 cases in the last 24 hours, taking the total caseload to 30,944,949, according to Worldometer. The death count increased to 411,439 with 623 new fatalities, the data showed.  However, markets soon staged sharp recovery, taking support from report that the government may extend the scheme for investment promotion 2017-20, with an aim to attract investors and promote economic growth of the country. Sentiments remained positive as wholesale price-based inflation eased marginally to 12.07 per cent in June as crude oil and food items witnessed some softening in prices. However, WPI inflation remained in double digit for the third consecutive month in June, mainly due to a low base of last year. WPI inflation was (-) 1.81 per cent, in June 2020. Traders took note of report that global rating agency Standard and Poor's has affirmed India's sovereign rating at BBB- and maintained a stable outlook on gradual recovery in the economy. It said India's recovery will gather pace through the second half of FY22 and into the following year, helping to stabilise the country's overall credit profile. Meanwhile, Finance Secretary T V Somanathan has underlined the need for improving the fiscal position of the government through reforms in farm, food and fertilizer subsidies so that additional funds can be generated for development of infrastructure and education system. He said that farm, food and fertilizer reforms are administratively easy but politically difficult in view of the ramifications. Finally, the BSE Sensex rose 134.32 points or 0.25% to 52,904.05, while the CNX Nifty was up by 41.60 points or 0.26% to 15,853.95.

The US markets ended mostly higher on Wednesday amid a positive reaction to Federal Reserve Chair Jerome Powell's prepared remarks before the House Financial Services Committee. Powell reiterated the belief that substantial further progress towards the Fed's goals of maximum employment and price stability is still a ways off, suggesting the central bank is not likely to begin tightening monetary policy anytime soon. The Fed chief also once again stressed that the Fed will provide advance notice before announcing any changes to its asset purchase program. Powell acknowledged that inflation has increased notably and will likely remain elevated in coming months but predicted inflation would moderate as the effects of the production bottlenecks unwind. On the economic data front, the Labor Department released a report showing US producer prices jumped by much more than expected in the month of June. The Labor Department said its producer price index for final demand surged up by 1.0 percent in June after climbing by 0.8 percent in May. Street had expected producer prices to rise by 0.6 percent. The bigger than expected increase in producer prices was largely due to an advance in prices for services, which accounted for nearly 60 percent of the jump by the headline index. Prices for final demand services climbed by 0.8 percent in June, as prices for trade services spiked by 2.1 percent and prices for transportation and warehousing services increased by 0.9 percent.

Crude oil futures ended lower on Wednesday despite data showing a drop in US crude inventories for an eighth straight week.  Data released by Energy Information Administration (EIA) showed crude inventories in the US dropped by 7.9 million barrels in the week ended July 9, much higher than an expected decline of about 4.9 million barrels. The American Petroleum Institute's report showed crude oil inventories fell by 4.1 million barrels last week. Further, data showing a drop in China's first-half crude imports also weighed on oil prices. Data released by the General Administration of Customs showed that imports into China for the first half of 2021 totaled 260.66 million tons, or about 10.51 million bpd, down about 3% from last year. Oil prices also fell due reports that major crude producers Saudi Arabia and the United Arab Emirates have arrived at a compromise with regard to production levels. Crude oil futures for August fell $2.12 or 2.8 percent to settle at $73.13 barrel on the New York Mercantile Exchange. September Brent crude dropped $1.7 or 2.3 percent to settle at $74.76 a barrel on London's Intercontinental Exchange.

Snapping previous day's gaining streak, Indian rupee ended weaker against dollar on Wednesday with fresh dollar demand by banks and importers. Traders were worried with private report stating that the USD-INR range to shift towards 74-77 in 2HFY22 as markets begin to grapple with the widening current account deficit (from an estimated marginal surplus in 1QFY22), volatile capital flows, growth-inflation trade-offs and consequent global policy normalization. However, downfall remains capped as WPI inflation remained in double digit for the third consecutive month in June, mainly due to a low base of last year. WPI inflation was (-) 1.81 per cent, in June 2020. Additional support also came with report that the government may extend the scheme for investment promotion 2017-20, with an aim to attract investors and promote economic growth of the country. On the global front, sterling climbed against the dollar on Wednesday as UK inflation rose more than expected to its highest in almost three years, putting the focus of the Bank of England's plan to keep its huge stimulus programme in place. Finally, the rupee ended 74.59, weaker by 10 paise from its previous close of 74.49 on Tuesday.

The FIIs as per Wednesday's data were net buyers in both equity and debt segment. In equity segment, the gross buying was of Rs 5165.49 crore against gross selling of Rs 5095.58 crore, while in the debt segment, the gross purchase was of Rs 646.78 crore against gross selling of Rs 164.06 crore. Besides, in the hybrid segment, the gross buying was of Rs 4.47 crore against gross selling of Rs 13.90 crore.

The US markets ended mostly higher on Wednesday amid investors weighed the latest corporate earnings reports and the Federal Reserve chairs comments on inflation. Asian markets are trading mixed on Thursday as investors await China's second-quarter GDP data. Indian markets climbed higher on Wednesday, rebounding strongly after weak initial few hours of trade, bucking the broad-based global trend, boosted by IT stocks as investors awaited June quarter earnings of IT major Infosys. Today, the start of session is likely to be flat-to-positive tracking similar trend in the global markets. Traders may take note of report that garment exporters will continue to get a rebate on central and state taxes on their outward shipments as the government approved extension of RoSCTL scheme till March 2024. However, there will be some cautiousness with a private report that even though the second wave has ebbed, the increased presence of the Delta variant and the subsequent mutations of the coronavirus makes the third wave a real risk for the country. Also, Credit card spends fell to an eight-month low in May amid localised lockdowns imposed by states to battle the second wave of coronavirus. The latest cards data released by the Reserve Bank of India (RBI) shows the total credit card spends fell to Rs 548 billion in May, recording a more than a 7 percent decline from Rs 592 billion in the previous month. There will be some buzz in sugar stocks as industry body Indian Sugar Mills Association (ISMA) said India's sugar production in 2021-22 season that will start from October is expected to be around 31 million tonnes, almost similar to the current year's production of 30.9 million tonnes, even after accounting for 3.4 million tonnes of sugar diverted for producing ethanol. Auto stocks will be in focus as Society of Indian Automobile Manufacturers (SIAM) said  passenger vehicle wholesales in India rose to 2,31,633 units in June as compared with 1,05,617 units in the same month of 2020 which saw massive COVID-19 related disruptions. However, separately, it said rising fuel prices will have a negative impact on the automobile industry, hitting vehicle demand, while also adding to the overall inflationary pressure. There will be some reaction in shipping companies stocks as the Union Cabinet approved a scheme to provide Rs 1,624 crore over five years as subsidy to Indian shipping companies in global tenders floated by ministries and CPSEs for import of government cargo.

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

Nifty Top volumes

• Maruti Suzuki India is planning to invest Rs 18,000 crore for a new factory premises in Haryana, which may have a peak. 
• NTPC's wholly owned subsidiary -- NTPC Renewable Energy has received approval from MNRE to set up 4,750 MW renewable energy park at Rann of Kutch in Khavada, Gujarat. 
• Tata Motors' wholly owned subsidiary -- JLR has launched updated version of Land Rover Discovery in the country with price starting at Rs 88.06 lakh (ex-showroom).
• Coal India has engaged Accenture Solutions as consultant for digitalisation of mine process in seven of its select opencast blocks for accelerated performance enhancement.