Indian equity benchmarks closed in the deep red with losses of over two percent on Wednesday, dragged down by Banking, Metal and Basic Materials stocks. Markets made a gap down opening and continued to drift lower throughout the day, tracking negative cues from global peers as tensions in the Middle East and dimming hopes of a Fed rate cut hit investor sentiment. Traders got cautious as the Reserve Bank of India (RBI) alerted high-street banks to get ready for an emerging multi-currency world amid measures to internationalise the rupee. Traders took note of report that ratings agency Fitch has affirmed BBB- rating for India, with the outlook stated as stable. Traders paid no heed towards Crisil's report stating that corporates' revenues are likely to have grown 8-10 per cent in the 2023 December quarter on an annual basis. As per Crisil Ratings, the operating profits have likely expanded 100-150 basis points on-year in the three months ended December 2023, giving the corporates an overall operating margin of 19-20 per cent in the first nine months of 2023-24 fiscal. Traders also overlooked Union minister Hardeep Singh Puri's statement that India can become a $5 trillion economy much before 2028 and said the country's energy transition needs to be done in an orderly manner to safeguard the interests of its large population. Market participants also ignored the Reserve Bank of India (RBI) governor, Shaktikanta Das, stating that retail inflation is slowly moderating and is steadily moving towards the target of 4 per cent. Finally, the BSE Sensex fell 1628.01 points or 2.23% to 71,500.76 and the CNX Nifty was down by 460.35 points or 2.09% to 21,571.95.

The US markets ended lower on Wednesday. The weakness on markets partly reflected ongoing uncertainty about the outlook for interest rates amid recent concerns the Federal Reserve won't lower rates as early as previously anticipated. Adding to worries the Fed will hold off on cutting rates, the Commerce Department released a report showing U.S. retail sales increased by more than expected in the month of December. The report said retail sales climbed by 0.6 percent in December after rising by 0.3 percent in November. Street had expected retail sales to advance by 0.4 percent. Excluding a jump in sales by motor vehicle and parts dealers, retail sales rose by 0.4 percent in December after inching up by 0.2 percent in November. Ex-auto sales were expected to edge up by another 0.2 percent. A separate report released by the Federal Reserve showed an unexpected uptick in U.S. industrial production in the month of December. The Fed said industrial production inched up by 0.1 percent in December, while revised data showed production was unchanged in November. Street had expected industrial production to come in unchanged compared to the 0.2 percent increase originally reported for the previous month. On the sectoral front, airline stocks turned in some of the market's worst performances on the day, resulting in a 3.2 percent nosedive by the NYSE Arca Airline Index. The index fell to its lowest closing level in well over a month. Shares of Spirit Airlines (SAVE) plummeted after a federal judge blocked JetBlue's (JBLU) proposed $3.8 billion acquisition of the discount airline.

Crude oil futures ended higher on Wednesday despite weak fourth-quarter GDP data from China. China reported a 5.2% increase in fourth-quarter GDP, lower than the expected 5.3% rise. Meanwhile, OPEC reiterated that demand will rise by 2.2 million barrels per day this year, over 2023. OPEC expects oil demand to rise by 1.8 million barrels per day next year. Besides, the OPEC group produced 26.7 million barrels of crude oil per day in December, up from 26.628 million barrels of crude oil per day a month earlier. Benchmark crude oil futures for February delivery added 16 cents or 0.22 percent to settle at $72.56 a barrel on the New York Mercantile Exchange. However, Brent crude for March delivery fell 41 cents or 0.52 percent to settle at $ 77.88 a barrel on London's Intercontinental Exchange.  

Indian rupee ended lower on Wednesday amid massive selling in domestic equity markets and a strong greenback overseas. Traders got cautious as the Reserve Bank of India (RBI) alerted high-street banks to get ready for an emerging multi-currency world amid measures to internationalise the rupee. Investors paid no heed towards Crisil's report stating that corporates' revenues are likely to have grown 8-10 per cent in the 2023 December quarter on an annual basis. As per Crisil Ratings, the operating profits have likely expanded 100-150 basis points on-year in the three months ended December 2023, giving the corporates an overall operating margin of 19-20 per cent in the first nine months of 2023-24 fiscal. On the global front, dollar hit a one-month high against a basket of its peers on Wednesday as the safe haven gained on the hit to sentiment from soft Chinese data and global rate setters arguing against imminent cuts. Finally, the rupee ended at 83.13 (Provisional), weaker by 1 paisa from its previous close of 83.12 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 12670.07 crore against gross selling of Rs 11488.34 crore, while in the debt segment, the gross purchase was of Rs 2783.34 crore with gross sales of Rs 417.58 crore. Besides, in the hybrid segment, the gross buying was of Rs 53.46 crore against gross selling of Rs 31.83 crore.

The US markets ended lower on Wednesday as bond yields climbed on bets the Federal Reserve will be in no rush to cut rates as the economy shows signs of strength. Asian markets are trading mostly in green on Thursday despite the broadly negative cues from global markets overnight. Indian markets witnessed bloodbath and settled with over 2% cut on Tuesday due to weak global sentiment coupled with bear hammering of HDFC Bank. Today, markets are likely to extend previous session's sell-off with negative start tracking overnight losses on Wall Street. Besides, the weekly F&O expiry may add to further volatility in the markets. Foreign fund outflows likely to dent sentiments. Provisional data from the NSE showed that foreign institutional investors (FIIs) sold shares worth Rs 10,578.13 crore on January 17. Traders may take note of Governor Shaktikanta Das' statement that consumer price index-based inflation, the main yardstick for the Reserve Bank of India's policy making, is likely to average 4.5 per cent in the next financial year and gross domestic product (GDP) growth is likely to stay above 7 per cent. Besides, the commerce department and the finance ministry have discussed maintaining credit flow to Indian exporters grappling with higher trade costs due to the crisis in the Red Sea. Fertiliser industry stocks will be in focus as Mansukh Mandaviya, fertiliser minister said government's fertiliser subsidy bill is likely to decline 30-34% to Rs 1.7-1.8 lakh crore this fiscal due to a reduction in global prices and lower imports of urea. There will be some reaction in select aviation industry stocks as the Directorate General of Civil Aviation (DGCA) imposed a penalty of Rs 30 lakh each on SpiceJet and Air India, whereas, the Bureau of Civil Aviation Security (BCAS) slapped a fine of Rs 1.2 crore on IndiGo Airlines. Medical device industry stocks will be in limelight with report that India's dependence on medical devices shipped from abroad grew significantly between November 2022 and October 2023 with imports jumping by 21 per cent to Rs 61,262.84 crore. According to the data from the Department of Commerce, the top suppliers of medical devices were the US, Germany and the Netherlands. Hospital industry stocks will be in focus as rating agency ICRA projected a stable outlook for the Indian hospital industry in its report on the industry trends and outlook for the financial year 2024. The projection indicated a rise in capacity building and occupancy, translating into a year-on-year (Y-o-Y) revenue growth to the tune of 12 to 14 per cent in FY24 for its sample set of companies as opposed to 17 per cent in FY23. Meanwhile, HDFC Bank will be in focus as HDFC Bank ADRs fell 9% overnight in the US to close at the lowest level since July 2022. With this, its ADRs have plunged 15% in just two sessions. Moreover, investors will be eyeing the Q3 earnings from many companies for more directional cues.

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

Nifty Top volumes

• UltraTech Cement has incorporated a Wholly-owned Subsidiary viz. Letein Valley Cement to carry on the business of mining of limestone and other raw materials; manufacture and sale of cement.
• Larsen & Toubro's construction arm -- L&T construction has secured orders in India & Oman for its Buildings & Factories Business.
• HCL Technologies has entered into a collaboration with Cisco for cloud-native solutions.
• Sun Pharmaceutical Industries has signed an agreement with Bayer to market and distribute a second brand of Finerenone in India.