Thursday turned out to be yet another lackluster day for the Dalal Street, as bears held a tight grip amid renewed concerns about the outlook for interest rates after the US Fed signaled on keeping interest rates at an elevated level through 2024 after one more rate hike this year, despite the decision to hold interest rates steady this month. After a gap down opening, markets remained under selling pressure, as the Asian Development Bank (ADB) marginally lowered India's growth forecast to 6.3 per cent for the current financial year from its earlier projection of 6.4 per cent on account of slowing exports and the likely impact of erratic rainfall on agriculture output. Foreign fund outflows also dented investors' sentiments. The provisional data from the National Stock Exchange (NSE) showed that foreign institutional investors (FII) sold shares worth Rs 3,110.69 crore on September 20. Domestic sentiments were downbeat, as the Reserve Bank of India (RBI) recently released data on household financial savings which created a stir in the markets. The data showed that household financial savings were at 5.1 percent of GDP, almost a 40-year low.  Weak trade continued in the markets till the end of the trading session, as investors got cautious after the All-India Consumer Price Index Number for Agricultural Labourers and Rural Labourers (Base: 1986-87=100) for the month of August, 2023 increased by 9 points and 8 points respectively to stand at 1224 and 1234 points respectively. Adding more worries, another private report stated that with crude oil hovering near $94 a barrel, India, the world's third biggest importer, is confronted with the return of a long-feared spectre: the twin deficit challenge. Finally, the BSE Sensex fell 570.60 points or 0.85% to 66,230.24 and the CNX Nifty down by 159.05 points or 0.80% to 19,742.35.

The US markets magnified previous session's losses and ended deeply in red on Thursday. Concerns about the outlook for interest rates continued to weigh on markets following the Federal Reserve's monetary policy announcement on Wednesday. While the Fed left interest rates unchanged as widely expected, the central bank forecast another rate hike before the end of the year as well as keeping rates at elevated levels for longer than previously anticipated. The worries about interest rates contributed to a surge by treasury yields, with the yield on the benchmark ten-year note jumping to its highest level in almost sixteen years. Adding to the concerns about interest rates, the Labor Department released a report showing first-time claims for U.S. unemployment benefits unexpectedly fell to a seven-month low in the week ended September 16th. The report said initial jobless claims dipped to 201,000, a decrease of 20,000 from the previous week's revised level of 221,000. Street had expected jobless claims to inch up to 225,000 from the 220,000 originally reported for the previous week. On the sectoral front, Interest rate-sensitive commercial real estate stocks saw substantial weakness on the day, resulting in a 3.5 percent nosedive by the Dow Jones U.S. Real Estate Index. The index plunged to its lowest closing level in almost six months. Considerable weakness was also visible among housing stocks, with the Philadelphia Housing Sector Index tumbling by 2.7 percent to a three-month closing low. The weakness in the housing sector came after the National Association of Realtors released a report unexpectedly showing a continued decrease in existing home sales.

Crude oil futures ended slightly lower on Thursday on concerns higher interest rates and economic slowdown could hurt energy demand. However, losses remained capped amid concerns about tight supplies after Russia imposed a ban on fuel exports. The Russian government's announcement that it will restrict exports of gasoline and diesel, aiming to stabilize prices. Benchmark crude oil futures for November delivery fell $0.03 to settle at $89.63 a barrel on the New York Mercantile Exchange. Brent crude for November delivery declined $0.23 or 0.24 percent to settle at $93.30 a barrel on London's Intercontinental Exchange.

Indian rupee appreciated against the dollar on Thursday as crude oil price receded from its elevated level. Traders got support as NITI Aayog member Arvind Virmani expressed optimism over economic condition of India and said that the country's economy will grow at around 6.5 per cent in the current fiscal (FY24). He also asserted that the gross household savings ratio in India has consistently gone up. On the global front, the pound extended losses on Thursday after the Bank of England held interest rates steady at 5.25% as inflation slowed more than expected in August. Finally, the rupee ended at 83.06 (Provisional), stronger by 5 paise from its previous close of 83.11 on Wednesday.

The FIIs as per Thursday's data were net sellers in both equity and debt segments. In equity segment, the gross buying was of Rs 15777.46 crore against gross selling of Rs 18853.34 crore, while in the debt segment, the gross purchase was of Rs 378.38 crore with gross sales of Rs 1518.69 crore. Besides, in the hybrid segment, the gross buying was of Rs 21.72 crore against gross selling of Rs 33.68 crore.

The US markets ended lower on Thursday as investors reacted to a signal from the Federal Reserve that it intended to keep interest rates higher for longer. Asian markets are trading mixed on Friday ahead of the Bank of Japan's policy announcement. Indian markets ended lower on Thursday after the US Federal Reserve's tighter policy through 2024 spooked investors. Today, domestic indices are likely to get yet another negative start tracking mixed cues from global markets. Besides, escalating diplomatic tensions between India and Canada likely to dampen sentiments. India temporarily suspended visa operations with Canada for an indefinite period due to alleged security threats against diplomatic staff, amidst a diplomatic crisis that arose following the latter's allegation that India is responsible for the killing of a Sikh activist. Persistent selling by FIIs likely to impact domestic markets. Provisional data from the National Stock Exchange (NSE) showed that foreign institutional investors (FII) sold shares worth Rs 3,007.36 crore on September 21. However, some support may come later in the day as Reserve Bank of India data showed that getting a boost from the festive period, bank credit expanded by 15.07 per cent year-on-year as of September 8, 2023. Traders may take note of report that the Securities and Exchange Board of India (Sebi) relaxed the framework mandating large corporates (LCs) to access the corporate bond market for debt-raising on Thursday. Meanwhile, as a measure to prevent erroneous order placement, the Exchange has notified that Stop Loss orders with Market condition (SL-M) in Equity segment, Equity Derivatives segment, Currency Derivatives segment and Commodity Derivatives segment shall be discontinued with effect from October 9, 2023. Banking stocks will be in focus as Reserve Bank of India (RBI) Deputy Governor Michael Patra said India's bank credit remains resilient and is showing no signs of systematic risk. There will be some reaction in edible oil industry stocks amid a private report that India's soybean production is expected to drop as patchy monsoon rains in August stunted the crop in some key growing areas. Sugar industry stocks will be in limelight amid a private report that India is unlikely to export sugar in 2023-24 season as output will be less than a year earlier. Moreover, Samhi Hotels and Zaggle Prepaid Ocean Services will debut on the bourses today. The issue price for Samhi Hotelsis fixed at Rs 126, while that of Zaggle has been fixed at Rs 164.

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

Nifty Top volumes

• Infosys and NVIDIA have expanded their strategic collaboration with the aim to help enterprises worldwide, drive productivity gains with generative AI applications and solutions. 
• USFDA has concluded inspection at Cipla's wholly owned subsidiary -- InvaGen Pharmaceuticals' manufacturing facility located in Central Islip, Long Island, New York, USA. 
• Apollo Tyres has announced the temporary cessation of bias off-the-road (OTR) tyre production at its manufacturing facility located in Limda, Gujarat.
• TCS has helped Kingfisher plc to drive seamless customer experiences using TCS OmniStore, an AI powered unified commerce platform.