Indian equity benchmarks, after hitting record highs in early deals, witnessed a bout of profit taking and lost over a percent on Wednesday. After the initial uptick, markets hovered in a range in the first half as traders took encouragement with the finance ministry's statement that tax reforms, a sharp hike in capital spending without weakening fiscal discipline and robust public digital infrastructure are among a raft of steps initiated by the Modi government that would help India emerge as a $5-trillion economy. Some support also came in as International Monetary Fund's Executive Board said Indian economy is likely to log 6.3% growth in FY24 and FY25 on the back of macroeconomic and financial stability. Some optimism also came with the World Bank in its latest report stating that India saw the highest amount of remittance inflows in the world in 2023 at $125 billion, driven by several factors, including the country's agreement with the UAE, for promoting the use of dirhams and rupees for bilateral trade. However, domestic markets saw a sharp and abrupt sell-off in the second half, despite the positive trend in global peers. Traders got anxious with Union Agriculture Minister Arjun Munda's statement that share of agriculture in India's GDP declined to 15 per cent last fiscal year from 35 per cent in 1990-91 due to rapid growth in the industrial and service sector. The decline is brought out not by the decline in agricultural GVA but a rapid expansion in industrial and service sector GVA. Some concern also came with a private report that investments by private equity and venture capital funds plummeted to a 43-month low of $1.6 billion in November. Traders overlooked report that Parliament has given its approval for a net additional spending of Rs 58,378.21 crore in the current fiscal ending March 2024 (FY24), with a large chunk allocated to MGNREGA and fertiliser subsidies. The gross additional spending would be more than Rs 1.29 lakh crore, out of which Rs 70,968 crore would be matched by savings and receipts. Finally, the BSE Sensex fell 930.88 points or 1.30% to 70,506.31 and the CNX Nifty was down by 302.95 points or 1.14% to 21,150.15.

The US markets ended deeply lower on Wednesday on account of profit booking after gains in recent sessions. A steep drop by shares of FedEx (FDX) also weighed on the markets, with the delivery giant plunging by 12.1 percent on the day. The nosedive by FedEx came after the company reported weaker than expected fiscal second quarter results and lowered its full-year revenue guidance. Traders shrugged off a Conference Board showing a much bigger than expected improvement in U.S. consumer confidence. The Conference Board said its consumer confidence index jumped to 110.7 in December from a downwardly revised 101.0 in November. Street had expected the consumer confidence index to rise to 103.4 from the 102.0 originally reported for the previous month. Meanwhile, the National Association of Realtors (NAR) released a report showing existing home sales unexpectedly rebounded in the month of November. NAR said existing home sales climbed by 0.8 percent to an annual rate of 3.82 million in November after plunging by 4.1 percent to a rate of 3.79 million in October. The increase surprised participants, who had expected existing home sales to dip by another 0.5 percent to an annual rate of 3.77 million. On the economic data front, Biotechnology stocks moved sharply lower over the course of the session, with the NYSE Arca Biotechnology Index plunging by 3.4 percent after ending Tuesday's trading at a five-month closing high. Netherlands-based Argenx (ARGX) led the sector lower, plummeting by 25.1 percent after reporting disappointing results from a late-stage trial of its therapy for an autoimmune condition that causes skin blistering. Substantial weakness also emerged among semiconductor stocks, as reflected by the 2.9 percent slump by the Philadelphia Semiconductor Index. The index reached a record closing high on Tuesday.

Crude oil futures ended higher on Wednesday, magnifying their previous session's gains on concerns about trade disruptions due to rising tensions in the Middle East after attacks on vessels in the Red Sea by Houthi forces. However, data showing an unexpected increase in U.S. crude inventory limited the uptick in oil prices. Data released by the Energy Information Administration (EIA) showed crude inventory increased 2.9 million barrels in the week ended December 15, as against forecast for a drop of 2.3 million barrels. The EIA data also showed gasoline stockpiles rose by 2.7 million barrels last week, higher than an expected increase of 1.2 million barrels. Benchmark crude oil futures for January delivery rose $0.28 or 0.4 percent to settle at $74.22 a barrel on the New York Mercantile Exchange. Brent crude for February delivery was up by $0.47 or 0.6 percent to settle at $79.70 a barrel on London's Intercontinental Exchange.

Indian Rupee ended flat against the US dollar on Wednesday amid massive selling in equity markets as concerns over oil supplies through the Red Sea route dented investor sentiment. Traders ignored report that International Monetary Fund's Executive Board said Indian economy is likely to log 6.3% growth in FY24 and FY25 on the back of macroeconomic and financial stability. On the global front, the U.S. dollar held steady on Wednesday against a basket of peers as traders weighed the chances that the U.S. Federal Reserve would soon begin cutting interest rates. Fed officials have been pushing back after last week's Federal Open Market Committee meeting saw three rate cuts penciled in for 2024, sparking a rally in financial markets. Finally, the rupee ended flat with its previous close of 83.18 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 13912.39 crore against gross selling of Rs 12052.47 crore, while in the debt segment, the gross purchase was of Rs 3111.51 crore with gross sales of Rs 1859.61 crore. Besides, in the hybrid segment, the gross buying was of Rs 23.73 crore against gross selling of Rs 20.71 crore.

The US markets ended lower on Wednesday as traders took profits after recent strong gains amid signs of falling inflation and dovish Fed bets. Asian markets are trading mostly in red on Thursday with technology and commodity-related stocks bearing the brunt of the selling amid a shift in sentiment. Indian markets after hitting fresh highs in early deals witnessed sharp sell-off and settled with cut of over one and half a percent each on Wednesday on account of profit booking after recent rally. Today, markets are likely to extend previous session's losses with negative start as investors across the world resorted to profit-taking following the recent sharp gains. Also, there will be some cautiousness as the new Covid-19 scare with the detection of new variant JN.1 in states like Goa, Kerala and Maharashtra.  Traders will be concerned with a private report that the country's total debt, or the total outstanding bonds which are being traded in the market, rose to $2.47 trillion (Rs 205 lakh crore) in the September quarter. The total debt amount in the March quarter of the previous fiscal was $2.34 trillion (Rs 200 lakh crore). Some pessimism may come as the Reserve Bank of India (RBI), in its December bulletin, highlighted a concerning trend, stating that the real-time inflation is adversely impacting discretionary consumer spending. It said this, in turn, is impeding the overall growth of manufacturing companies, including their capital expenditure. However, some respite may come later in the day as an analysis conducted by the PHD Research Bureau, PHD Chamber of Commerce and Industry showed that India has emerged as the most resilient economy among the top ten leading economies in the post pandemic years of 2022, 2023. Some support may come as formal job creation under the Employees' Provident Fund Organisation (EPFO) increased 18.2% year-on-year in October with the addition of 1.53 million net new subscribers. Telecom stocks will be in focus as the latest data from the Telecom Regulatory Authority of India (TRAI) showed that Reliance Jio continued to strengthen its position in the Indian telecom market, gaining 3.47 million new users in September. Bharti Airtel saw its subscriber count increase by 1.32 million users, while Vodafone Idea (Vi) saw 0.74 million users leave their service. There will be some reaction in road and infrastructure related stocks with report that the average annual budgetary allocation of the Ministry of Road Transport & Highways (MoRTH) has increased by 940 per cent from Rs 25,872 crore per year during 2009-14 to Rs 2.7 trillion during 2023-24. Auto component industry stocks will be in limelight as Automotive Component Manufacturers Association of India (ACMA) President Shradha Suri Marwah said the auto component industry is looking to invest around $6.5 to 7 billion over the next five years on capacity expansion and technology upgradation, with the demand expected to remain robust over the period.

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

Nifty Top volumes

• ITC's wholly owned subsidiary -- ITC Infotech India has incorporated a WOS in the Kingdom of Saudi Arabia under the name of ITC Infotech Arabia.
• Wipro's subsidiary -- Wipro Holdings (UK) has transferred 100 per cent shareholding in Designit A/S to Wipro IT Services UK Societas.
• BPCL has received approval for a proposal for setting up Polypropylene Unit, for production of Polypropylene at Kochi Refinery, at gross project cost of Rs 5044 crore.
• UPL is planning to raise fund by issue of equity shares through appropriate permissible modes.