Rising for the fourth straight session, Indian equity benchmarks ended at fresh record closing highs on Wednesday backed by strong global cues and a rally in Metal and Auto stocks. Domestic equities made a positive start and traded in a thin range for better part of the day as traders took support with the Reserve Bank of India stating that India's current account deficit narrowed in the July-September quarter largely due to a lower merchandise trade deficit while services exports also grew. The current account deficit stood at $8.3 billion, or 1% of GDP, in the second quarter of fiscal 2023-24 as compared to $9.2 billion or 1.1% of GDP in the preceding quarter. Traders took note of report that the negotiations for the proposed free trade agreement (FTA) between India and Oman are moving at a fast pace and the pact is likely to be signed next month. Markets picked pace towards the fag-end of the session to settle around the day's high as sentiments remained up-beat with a report that as many as 746 applications have been approved till November 2023 under the Production Linked Incentive (PLI) schemes for 14 sectors such as pharma, white goods, and electronics. The schemes for 14 sectors were announced with an outlay of Rs 1.97 lakh crore to enhance India's manufacturing capabilities and exports. Some support also came as the department for promotion of industry and internal trade (DPIIT) is working with 24 sub-sectors, including furniture, aluminium, agrochemicals and textiles, to promote domestic manufacturing, boost exports and reduce imports. Traders overlooked ratings agency India Ratings and Research's report stating that India's fiscal deficit is likely to breach the government's target of 5.9% in FY24 owing to higher revenue expenditure and lower than budgeted nominal GDP. It noted that although higher tax and non-tax revenue collections may offset the shortfall in divestment earnings, a likely second supplementary demand for grants will upset fiscal calculations, pushing the deficit to 6% of GDP. Finally, the BSE Sensex rose 701.63 points or 0.98% to 72,038.43 and the CNX Nifty was up by 213.40 points or 1.00% to 21,654.75.

The US markets ended higher on Wednesday as treasury yields moved notably lower over the course of the session, with the yield on the benchmark ten-year note falling to its lowest level in five months. Treasury yield saw further downside after the Treasury Department revealed this month's auction of $58 billion worth of five-year notes attracted average demand. The decrease in treasury yields has added to optimism about the outlook for interest rates, generating renewed buying interest on markets. However, traders seemed somewhat reluctant to continue buying stocks following the recent strength in the markets. On the sectoral front, most of the major sectors showed only modest moves on the day, contributing to the lackluster close by the broader markets. Tobacco stocks showed a strong move to the upside, however, with the NYSE Arca Tobacco Index climbing by 1.2 percent to its best closing level in well over seven months. A sharp increase by the price of gold also contributed to strength among gold stocks, as reflected by the 1.1 percent gain posted by the NYSE Arca Gold Bugs Index. The index reached a five-month closing high. Biotechnology and pharmaceutical stocks also saw some strength on the day, while energy stocks gave back ground along with the price of crude oil.

Crude oil futures ended lower on Wednesday on reports several shipping companies have decided to schedule their container vessels to travel via the Suez Canal and Red Sea again. Meanwhile, the release of weekly crude inventory reports from the American Petroleum Institute (API) and U.S. Energy Information Administration (EIA) are delayed by a day due to Christmas holiday on Monday. EIA will release its inventory data on Thursday. Benchmark crude oil futures for January delivery fell $1.46 or 1.9 percent to settle at $74.11 a barrel on the New York Mercantile Exchange. Brent crude for February delivery was down by $1.42 or 1.8 percent to settle at $79.65 a barrel on London's Intercontinental Exchange.

Indian rupee ended considerably lower on Wednesday due to sustained outflow of foreign funds and increased demand for American currency from importers and banks. Sentiments remained down-beat as ratings agency India Ratings and Research stated that India's fiscal deficit is likely to breach the government's target of 5.9% in FY24 owing to higher revenue expenditure and lower than budgeted nominal GDP. Besides, a robust buying trend in the domestic equity market failed to boost sentiment as investors remained concerned over volatile crude oil prices fearing disruption in global trade through the Red Sea route. On the global front, dollar slipped to a five-month low and the euro touched a four-month peak on expectations that the Federal Reserve could soon cut interest rates, but thin year-end trading flows limited moves. Finally, the rupee ended at 83.35 (Provisional), weaker by 16 paise from its previous close of 83.19 on Tuesday.

The FIIs as per Wednesday's data were net buyers in equity segment, while they were net sellers in debt segment. In equity segment, the gross buying was of Rs 6561.82 crore against gross selling of Rs 6024.31 crore, while in the debt segment, the gross purchase was of Rs 639.66 crore with gross sales of Rs 1616.71 crore. Besides, in the hybrid segment, the gross buying was of Rs 141.37 crore against gross selling of Rs 119.96 crore.

The US markets ended higher on Wednesday as treasury yields moved notably lower over the course of the session, with the yield on the benchmark ten-year note falling to its lowest level in five months. Asian markets are trading mostly in green on Thursday as market wagers on ever-more aggressive rate cuts extended a huge rally in U.S. stocks and bonds. Indian markets ended at new heights on Wednesday, buoyed by a global rally amid prospects of the US Federal Reserve slashing rates as early as March next year. Today, markets are likely to continue previous session's record breaking rally with positive start to strike new highs tracking firm cues from global peers. Foreign fund inflows likely to aid sentiments. Provisional data from the NSE showed foreign institutional investors (FIIs) turned net buyers for the first time in the last seven consecutive sessions, buying shares worth Rs 2,926.05 crore on December 27. Traders will be taking encouragement as a report released by the Centre for Economics and Business Research (CEBR) showed that India is set to become the world's third-largest economy by 2032, and will eventually surpass China and the United States to become the world's largest economic superpower by the end of this century. It added India will sustain robust economic growth, averaging 6.5 percent from 2024 to 2028. Some support will come as External Affairs Minister S Jaishankar said India will begin trade negotiations with the Eurasian Economic Union (EEU) bloc of countries for a free trade deal in January. Traders may take note of the Department of Financial Services Secretary Vivek Joshi's statement that India Inc needs to think 'big and bold', and kickstart a new private sector investment cycle. Joshi also asked banks to include stress testing of cyber risks as part of the risk assessment framework. However, some volatility may remain in the markets due to the monthly derivatives expiry in later in the day. Some cautiousness may come with a private report that private equity (PE) and venture capital (VC) investments in India fell by around 41 per cent to $27.89 billion across 697 deals in 2023 so far, compared to $47.62 billion across 1,364 deals in the previous year. Meanwhile, Sebi extended the deadline for demat and mutual fund account holders to provide a nomination to their account to June 30, 2024. Shares of Banks and non-banking financial companies (NBFCs) are likely to be in focus after RBI in its Trend & Progress Report for 2022-23 stated that the both the financial institutions remained sound and resilient with banks' gross non-performing assets (GNPAs) at a decade-low. There will be some reaction stocks related to petroleum products as latest data released by the Petroleum Planning and Analysis Cell (PPAC) showed export of refined petroleum product imports grew 32.1 per cent in November to 5.6 million metric tonnes (mmt), up from 4.3 mmt in the year-ago month. Value-wise, exports stood at $4.3 billion in November, up from $3.8 billion a year back.

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

Nifty Top volumes

• Tata Motors has bagged an order to supply 1,350 units of diesel bus chassis from the Uttar Pradesh State Road Transport Corporation.
• Larsen & Toubro's construction arm -- L&T construction has been chosen as the turnkey Engineering, Procurement and Construction contractor.
• State Bank of India has purchased non-convertible debentures worth Rs 200 crore issued by Muthoot Fincorp.
• Power Grid Corporation of India, pursuant to its selection as the successful bidder under Tariff based competitive bidding, has acquired Koppal II Gadag II Transmission.