Indian equity benchmarks reeled under heavy selling pressure and finally settled near day's lows on Wednesday as persistent concerns about elevated oil prices, US interest rates, and the Middle East conflict weighed on investor sentiments. After making a cautious start, key gauges gradually drifted lower as traders got anxious with ratings agency ICRA's statement that borrowing costs for state governments and union territories are expected to increase in the second half of Financial Year 2023-24 (FY24) on rising bond yields and widening of spreads up to 15 basis points. Some pessimism also came as a private report said that the much anticipated free trade agreement between India and the United Kingdom is likely to be delayed yet again owing to certain differences between the two countries, especially on the question of trade in goods and services. The street paid no heed towards credit rating agency, India Ratings and Research's (Ind-Ra) latest report stating that the corporate credit profile continued its robust performance in first half of the current financial year (H1FY24), third year in a row. Among the sectors which witnessed positive rating actions are infrastructure asset operators, largely from the renewable power sector. Traders also overlooked the provisional data available on the NSE showing that foreign institutional investors (FII) purchased shares worth net Rs 263.68 crore on October 17, 2023. Traders took a note of report that the Centre announced a cut on the windfall tax on petroleum crude, aviation turbine fuel, and diesel. As per a government notification, the special additional excise duty (SAED) on crude petroleum has now been reduced to Rs 9,050 per tonne from Rs 12,100 per tonne, effective October 18. The Centre had raised the windfall tax on petroleum crude to Rs 12,100 per tonne from Rs 10,000 per tonne on September 30. Finally, the BSE Sensex fell 551.07 points or 0.83% to 65,877.02 and the CNX Nifty was down by 140.40 points or 0.71% to 19,671.10.

The US markets ended lower on Wednesday with Nasdaq settling over one and half percent amid rising tensions in the Middle East, and higher bond yields on concerns about the outlook for interest rates. According to reports, a deadly missile attack on Al-Ahli Baptist Hospital in Gaza killed several hundred people including women and children. Hamas attributed the blast to an Israeli airstrike, but the Israeli military said it was not involved and the explosion was caused by a misfired Palestinian rocket. On the economic data front, a report released by the Commerce Department showed a substantial rebound in new residential construction in the US in the month of September. The Commerce Department said housing starts spiked by 7.0 percent to an annual rate of 1.358 million in September after plunging by 12.5 percent to a revised rate of 1.269 million in August. Street had expected housing starts to jump to a rate of 1.380 million from the 1.283 million originally reported for the previous month. Meanwhile, the report said building permits tumbled by 4.4 percent to an annual rate of 1.475 million in September after surging by 6.8 percent to a revised rate of 1.541 million in August. Building permits, an indicator of future housing demand, were expected to decrease to a rate of 1.450 million from the 1.543 million originally reported for the previous month. In the stock specific developments, Tesla drifted down 4.8 percent after the company's earnings missed estimates. Nvidia ended nearly 4 percent down amid concerns over the tighter U.S. curbs on exports of its A800 and H800 chips to China.

Crude oil futures ended sharply higher on Wednesday on rising concerns over supplies as geopolitical concerns escalated after a huge explosion at a Gaza hospital. Further, oil prices rose after data from U.S. Energy Information Administration (EIA) showed crude inventory in the U.S. fell by 4.491 million barrels in the week ended October 13, after rising by 10.176 million barrels a weak ago.  Meanwhile, oil price also gained after data showing an improvement in Chinese economic growth. Official data showed China's GDP grew at a 4.9% annual pace in July-September, down from 6.3% in the previous quarter but above forecasts for a 4.4% increase. Benchmark crude oil futures for November delivery rose $1.66 or 1.9 percent to settle at $88.32 a barrel on the New York Mercantile Exchange. Brent crude for December delivery surged $1.60 or about 1.8 percent to settle at $91.50 a barrel on London's Intercontinental Exchange.

Indian rupee ended lower against dollar on Wednesday tracking negative cues from domestic equity markets amid surging crude oil prices overseas. Traders were concerned as ratings agency ICRA said borrowing costs for state governments and union territories are expected to increase in the second half of Financial Year 2023-24 (FY24) on rising bond yields and widening of spreads up to 15 basis points. Besides, private report said that the much anticipated free trade agreement between India and the United Kingdom is likely to be delayed yet again owing to certain differences between the two countries, especially on the question of trade in goods and services. On the global front, sterling ticked higher on Wednesday after data showed UK inflation held at 6.7% in September, showing no acceleration, but above expectations for a retreat to 6.6%. Finally, the rupee ended at 83.27 (Provisional), weaker by 2 paise from its previous close of 83.25 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 8807.70 crore against gross selling of Rs 8217.12 crore, while in the debt segment, the gross purchase was of Rs 393.40 crore with gross sales of Rs 244.71 crore. Besides, in the hybrid segment, the gross buying was of Rs 7.79 crore against gross selling of Rs 12.99 crore.

The US markets ended deeply in red on Wednesday amid rising tensions in the Middle East, and higher bond yields on concerns about the outlook for interest rates. Asian markets are trading mostly in red in early deals on Thursday following weak cues from global markets overnight.  Indian equity markets ended in red on Wednesday as investors assessed geopolitical developments after a huge explosion at a Gaza hospital derailed the diplomatic efforts led by the US to mobilize support for Israel's right to defend itself. Today, markets are likely to make gap-down opening on weak cues from global markets amid rising crude oil prices. Sentiments may remain weak as U.S. Treasury yields jumped to multiyear highs, with the 10-year Treasury yield breaking above 4.9% for the first time since 2007. Further, foreign fund outflows likely to dent sentiments. Provisional data from the National Stock Exchange (NSE) showed that foreign institutional investors (FII) sold shares worth Rs 1,831.84 crore on October 18.  Traders make take note of report that the Directorate General of Goods and Services Tax Intelligence (DGGI) has detected tax evasion amounting to Rs 1.36 trillion in the current financial year, recovering Rs 14,108 crore. This figure includes 1,040 cases of bogus input tax credit, valued at Rs 14,000 crore. So far, 91 individuals involved in fraud have been apprehended. However, some respite may come later in the day as private report said it expects GDP growth in the current fiscal to be in the range of 6.5-6.8 per cent primarily due to upcoming festive spending as well as higher government expenditure before the national elections mid-next year.  Meanwhile, other private report said India is determined to ensure a trusted supply chain for its digital ecosystem and will not compromise on the security of the internet. There may be some buzz in electric vehicles industry related stocks as Heavy Industries Secretary Kamran Rizvi expressed hope that about 60-70 per cent of the total two-wheelers on the road will be electric by 2030.

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

Nifty Top volumes

• ICICI Bank has signed an alliance partnership agreement with Tiger Logistics to facilitate integrated banking and end-to-end logistics for exporters and importers.
• Tata Motors has launched the new avatars of its iconic, flagship SUV Safari and its trendsetting, premium SUV Harrier.
• Bharti Airtel has launched Airtel CCaaS (Contact Center as a Service) - an industry first omni-channel cloud platform.
• Infosys has expended its alliance with Google Cloud to help enterprises build AI-powered experiences leveraging Infosys Topaz offerings and Google Cloud's generative AI solutions.