Indian equity benchmarks fell for second straight session on Wednesday dragged by losses in Finance, FMCG and Banking shares amid weaknesses from global markets. Markets made gap-down opening and traded in red for most part of the session, as traders remained cautious with Rating agency Crisil's statement that States' indebtedness will remain high this fiscal at 33 per cent, which is only a notch below the record high of 34 per cent of their gross domestic products in FY21, as tax buoyancy will be offset by higher revenue expenditure and capital outlays. Traders took note of commerce and industry minister Piyush Goyal's statement that measures to reduce compliance burden by simplifying and decriminalising several laws can have a multiplier effect on ease of doing business. However, the market witnessed some positive movements in late hour of trading session but failed to hold gains and ended lower, even as rating agency Standard & Poor's (S&P) statement that high-frequency indicators suggest a strong rebound during the July-September quarter after a steep contraction in activity in the previous three months on the back of a severe Covid-19 wave. The agency retained India's economic growth projection at 9.5 per cent for the current fiscal year. Traders also overlooked as Union Health Minister Mansukh Mandaviya's statement that India and the US are global partners and need to work collaboratively in reforming the global health architecture, whose fault lines have become amply visible during the current pandemic. Meanwhile, the government has again extended the existing foreign trade policy (FTP) for another six months till March 31 next year. Earlier, it had extended the FTP (2015-20) until September 30 this year due to the COVID-19 crisis. Finally, the BSE Sensex fell 254.33 points or 0.43% to 59,413.27 and the CNX Nifty was down by 37.30 points or 0.21% to 17,711.30.   

The US markets ended mostly higher on Wednesday. The volatility on markets came as traders kept a close eye on the bond markets following the recent surge by treasury yields. Stocks initially benefited from a pullback by yields, which inspired traders to go bargain hunting following the sell-off seen on Tuesday. However, yields moved slightly higher over the course of the session, with the ten-year yield reaching a new three-month closing high. The turnaround by yields came after Federal Reserve Chair Jerome Powell warned inflation could be held up longer than previously thought due to supply chain problems. Powell said the current inflation spike is really a consequence of supply constraints meeting very strong demand, and that is all associated with the reopening of the economy, which is a process that will have a beginning, a middle and an end. On the economic data front, after reporting two straight monthly decreases in US pending home sales, the National Association of Realtors (NAR) released a report showing pending home sales skyrocketed by much more than expected in the month of August. NAR said its pending home sales soared by 8.1 percent to 119.5 in August after tumbling by 2.0 percent to a revised 110.5 in July. Street had expected pending home sales to jump by 1.4 percent compared to the 1.8 percent slump originally reported for the previous month. The pending home sales index reached its highest level since January but was still down by 8.3 percent compared to the same month a year ago.

Crude oil futures ended lower on Wednesday, weighed by a stronger dollar and data showing a surge in US crude stockpiles last week. The dollar rose to a new yearly high, with the index climbing to 94.43. Data released by US Energy Information Administration (EIA) showed crude stockpiles increased by about 4.6 million barrels in the week ended September 24, rising for the first time in eight weeks. Markets had expected crude stockpiles to see a drop of 4.5 million barrels in the week. The EIA's report also showed gasoline inventories rose by 200,000 barrels last week versus an expected increase of about 700,000 barrels, and distillate stockpiles rose by 400,000 barrels compared to an expected decline of 2.2 million barrels. The American Petroleum Institute on Tuesday reported crude oil inventories rose by 4.1 million barrels last week. Benchmark Crude oil futures for November delivery fell $0.46 or 0.6 percent to settle at $74.83 barrel on the New York Mercantile Exchange. Brent crude for November delivery dropped $0.45 or 0.6 percent to settle at $79.64 a barrel on London's Intercontinental Exchange.

Falling for the fourth consecutive day, Indian rupee ended weaker against the US dollar on Wednesday, on increased demand for the greenback from importers and banks. Concerns over US default and worries over the slowing global economy hit the traders' sentiments. Sentiment remained cautious with rating agency Crisil's statement that States' indebtedness will remain high this fiscal at 33 per cent, which is only a notch below the record high of 34 per cent of their gross domestic products in FY21, as tax buoyancy will be offset by higher revenue expenditure and capital outlays. Investors' remained in sideline despite report that government has again extended the existing foreign trade policy (FTP) for another six months till March 31 next year. Earlier, it had extended the FTP (2015-20) until September 30 this year due to the COVID-19 crisis. On the global front, sterling fell to its lowest levels since January against the dollar on Wednesday, sustaining much of its losses the previous day after a selloff in equity markets hit risk sentiment and pushed the currency over 1% lower. Finally, the rupee ended 74.15, weaker by 9 paise from its previous close of 74.06 on Tuesday.

The FIIs as per Wednesday's data were net seller in equity and net buyer in debt segment. In equity segment, the gross buying was of Rs 8805.42 crore against gross selling of Rs 10682.60 crore, while in the debt segment, the gross purchase was of Rs 1906.13 crore against gross selling of Rs 1852.64 crore. Besides, in the hybrid segment, the gross buying was of Rs 5.24 crore against gross selling of Rs 56.01 crore.

The US markets ended mostly higher on Wednesday with remarks from U.S. Federal Reserve Chairman Jerome Powell and the ongoing debt ceiling debate keeping a lid on gains. Asian markets are trading mostly in green on Thursday as investors reacted to the release of Chinese factory activity data for September. Indian markets closed in the red for the second straight session following a gap down opening Wednesday, tracking weaknesses from global markets. Today, markets are likely to extend their fall to a third day in a row on account of monthly F&O expiry. Traders will be concerned as India recorded a spike of 23,139 new Covid-19 cases in the past 24 hours. The country also witnessed 309 deaths, taking the death toll to 448,090. So far, India has recorded 33,738,188 corona cases in total. Delhi reported 41 Covid-19 cases and no fatality. Kerala recorded 12,161 new Covid-19 cases and Maharashtra 3,187 cases. However, traders may take some encouragement as Chief Economic Adviser (CEA) K V Subramanian on Wednesday said India will clock over 7 per cent annual growth during this decade on the back of strong economic fundamentals. During the current fiscal, he said, growth would be in double-digits and it could moderate to 6.5 - 7 per cent in the next financial year. He added growth will be aided by various structural reforms, including labour and farm laws, undertaken by the government. Some support may come as in order to increase utilisation of the Emergency Credit Line Guarantee Scheme (ECLGS) and provide support to small businesses ahead of the festive season and economic upturn, the government has expanded the scheme by increasing the borrowing limit for availing loans. Meanwhile, SEBI decided to introduce a swing pricing mechanism for open-ended debt mutual fund schemes, a move that will discourage large investors from sudden redemptions. There will be some reaction in real industry sector stocks with a private report that housing sales have jumped over two-fold during July-September period at 62,800 units across seven major cities on better demand driven by low mortgage rates and hiring in IT/ITeS sector. In the primary market, the initial public offer of Aditya Birla Sun Life AMC will enter its second day. So far, the issue has been subscribed nearly 50 per cent.

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

Nifty Top volumes

• HCL Technologies has joined the Amazon Web Services Service Delivery Program and become an AWS Contact Center Intelligence Partner. 
• Crisil Rating has upgraded the long term rating on the bank facilities and debt programme of Bharti Airtel to AA+ with a stable outlook. 
• Tata Consultancy Services has partnered with Newgen for their Flagship Banking Service Bureau Project in Israel. 
• Tata Motors has launched the Tiago NRG hatchback in Nepal in partnership with Sipradi Trading at a starting price of NPR 33.75 lakh.