Indian equity benchmarks snapped their two-day gaining streak and settled marginally lower on Wednesday, amid volatile trading ahead of the expiration of monthly derivatives. After making cautious start, the benchmark indices swung between gains and losses for whole day, in tandem with weak global market cues. Caution prevailed among investors with the finance ministry's report stated that the government's total liabilities (including liabilities under the Public Account) stood at Rs 125.71 lakh crore in the September quarter (Q2FY22), up 3.97 per cent from the previous quarter. The total liabilities of the government were Rs 120.91 lakh crore in the three months ended June (Q1FY22). Traders remain worried as India reported 6,358 new coronavirus cases on Tuesday, according to the health ministry. The active caseload of the country now stands at 75,456. Omicron cases have risen to 653. However, losses remain capped as some optimism remained among traders with rating agency ICRA in its latest report stated that India's real gross domestic product (GDP) is likely to maintain a 9% growth rate in fiscal 2022 and 2023. The Indian economy grew at 8.4% in the second quarter of the current fiscal, as against a growth of 20.1% in the April-June quarter. Some support also came with the Reserve Bank of India's (RBI) report said that non-banking financial companies (NBFCs) are expected to remain buoyant going ahead, with the increased pace of vaccinations and the broadening revival of the economy. It said the COVID-19 pandemic has tested the resilience of NBFCs, but so far, the sector has emerged stronger with reasonable balance sheet growth, increased credit intermediation, higher capital, lower delinquency ratio and enlarged liquidity cushions. Traders also took note of report that Finance Minister Nirmala Sitharaman will hold a meeting with finance ministers of states on Thursday as part of customary pre-Budget consultations with various stakeholders. Finally, the BSE Sensex fell 90.99 points or 0.16% to 57,806.49 and the CNX Nifty was down by 19.65 points or 0.11% to 17,213.60.

The US markets ended mostly in green on Wednesday despite lingering worries about the coronavirus' omicron variant. The S&P 500 eked out its 70th record close of 2021. The S&P 500 has closed at a record 28% of the time in 2021. This year has seen the second-highest number of record closes ever, behind 77 closing highs in 1995. However, traders seemed reluctant to continue making significant moves following recent strength in the markets, which has helped stocks recover from the sell-off seen in reaction to initial reports about the Omicron variant of the coronavirus. On the sector front, Most of the major sectors ended the day showing only modest moves, contributing to the lackluster close by the broader markets. Airline stocks showed a substantial move to the downside, however, with the NYSE Arca Airline Index plunging by 2.5 percent. Significant weakness was also visible among oil service stocks, as reflected by the 1.4 percent drop by the Philadelphia Oil Service Index. The weakness in the sector came despite an increase by the price of crude oil. On the economic data front, a report released by the National Association of Realtors (NAR) showed an unexpected pullback in pending home sales in the month of November. NAR said its pending home sales index slid 2.2 percent to 122.4 in November after spiking 7.5 percent to 125.2 in October. The decrease surprised participants, who had expected pending home sales to rise by 0.5 percent. A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.

Crude oil futures ended higher on Wednesday, magnifying the advance seen over the past several sessions, after government data showed US crude and fuel inventories fell last week. The report showed crude oil inventories slid by 3.6 million barrels in the week ended December 24, exceeding street estimates for a decrease of 3.1 million barrels. Gasoline inventories also fell by 1.5 million barrels last week, while distillate fuel inventories declined by 1.7 million barrels. A separate report released by the American Petroleum Institute on Tuesday showed crude oil inventories decreased by 3.1 million barrels last week. Benchmark crude oil futures for February delivery rose $0.58 or 0.8 percent to settle at $76.56 a barrel on the New York Mercantile Exchange. Brent crude for February delivery surged $0.29 or 0.37 percent to settle at $79.23 a barrel on London's Intercontinental Exchange.

Indian rupee ended weaker against the US dollar on Wednesday, on increased demand for the greenback from importers and banks. Investors remain concerned with the finance ministry's report stated that the government's total liabilities (including liabilities under the 'Public Account') stood at Rs 125.71 lakh crore in the September quarter (Q2FY22), up 3.97 per cent from the previous quarter. The total liabilities of the government were Rs 120.91 lakh crore in the three months ended June (Q1FY22). However, downfall remain capped as Reserve Bank of India's (RBI) report said that non-banking financial companies (NBFCs) are expected to remain buoyant going ahead, with the increased pace of vaccinations and the broadening revival of the economy. On the global front, dollar inched up on Wednesday as a recent rally in shares showed signs of petering out, but holiday-thinned trading meant markets were showing little real direction. Finally, the rupee ended 74.71 (Provisional), weaker by 1 paise from its previous close of 74.70 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 4855.01 crore against gross selling of Rs 3225.22 crore, while in the debt segment, the gross purchase was of Rs 98.41 crore with gross sales of Rs 912.45 crore. Besides, in the hybrid segment, the gross buying was of Rs 3.74 crore against gross selling of Rs 11.18 crore.

The US markets ended mostly higher on Wednesday on a boost from retailers including Walgreens and Nike, as investors shrugged off concerns on the spreading Omicron variant. Asian markets are trading mostly in green on Thursday following the overnight gains on Wall Street. Indian markets ended a choppy session mildly lower on Wednesday, as gains in pharma and auto stocks were offset by financial and IT counters. Today, the start of the F&O series expiry session is likely to be flat-to-positive tracking gains in global markets. Sentiments will get a boost as the Federation of Indian Export Organisations (FIEO) said the country's exports are expected to register healthy growth rate in the financial year 2022-23 and might touch $530 billion as exporters are flushed with orders. It added that additional exports will come from some of the PLI (production-linked incentive) sectors in the next fiscal. Traders may take note of the I-T department's statement that over 5 crore income tax returns (ITR) for the financial year ended March 2021 have been filed so far. However, the expiry day is very much likely to bring in volatility later in the day. Rising corona cases are likely to dampen sentiments in the markets. India recorded a dramatic surge in its Omicron tally by logging more than 200 cases. Traders may concerned as the Reserve Bank in its second financial stability report stated that though the economy has steadily gained momentum and remained resilient since the second quarter of the current fiscal, the Omicron variant of coronavirus remains the major challenge along with rising inflation pressures. There may some cautiousness as the Reserve Bank expressed doubts about the government's ability to contain fiscal deficit at the budgeted 6.8 per cent this fiscal year after it moved the second supplementary demand of grants worth Rs 3.73 lakh crore which came in spite of a massive 83 per cent jump in net tax revenue so far this year to Rs 10.53 lakh crore. Investors will be looking ahead to the GST Council, chaired by Finance Minister Nirmala Sitharaman, meeting to be held on December 31 to discuss report of the panel of state ministers on rate rationalisation. This will be a physical meeting, which will also discuss correction in duty inversion in certain goods. Meanwhile, the government has extended till February 28 the deadline for businesses to file GST annual returns for 2020-21 fiscal ended March 2021. There will be some buzz in the telecom services sector stocks as ICRA revised outlook on telecom services sector to stable from negative and said the telecom tariff hike along with the recent relief package offers sufficient headroom for the industry to undertake deleveraging as well as fund capex for 5G tech upgrade. Banking stocks will be in focus as RBI report showed that bad loans of commercial banks in India may rise to between 8.1 and 9.5 per cent under varied degrees of stress by September 2022 from 6.9 per cent in September 2021.

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

Nifty Top volumes

• M&M's wholly owned subsidiary -- MECPL is all set to sell its entire stake aggregating 49% of the paid-up Equity Share Capital held in Mahindra Tsubaki Conveyor Systems. 
• NTPC is looking for strategic investor for its clean energy arm NTPC Renewable Energy ahead of its listing on bourses in October 2022. 
• Dr. Reddy's Laboratories has received EUA from the DCGI to manufacture and market the oral anti-viral drug Molnupiravir capsules 200mg for the treatment of adult patients with COVID-19. 
• Bajaj Auto is all set to set up an electric vehicle manufacturing facility at Akurdi in Pune with an investment of Rs 300 crore.