Indian equity benchmarks ended the day flat with negative bias after witnessing volatility on Thursday as market participants remained on sidelines ahead of the Reserve Bank of India's monetary policy decision due on Friday. Key gauges made positive start, as traders took some support as the finance ministry released the fifth instalment of revenue deficit grant of Rs 7,183 crore to 14 states for the current fiscal. Some support also came with a report that the Confederation of Indian Industry president Sanjiv Bajaj asked the Central government to contemplate reducing the personal income tax rates to spur economic activities. He also said the country's underlying growth drivers are strong and the economy would grow in the range of 7.4 per cent to 8.2 per cent in the next fiscal. Traders took note of report that the government plans to facilitate easier financing norms to activities pertaining to the manufacturing and services hubs envisaged under the proposed revamped law for Special Economic Zones (SEZs), also known as Development (Enterprise and Services) Hub Bill, 2022. However, markets erased all of their gains and fell sharply in afternoon deals, as traders got anxious with the government data showed that India's foreign direct investment to gross domestic product ratio eased to 2.7% in fiscal year ending March 31, 2022 from 3.1% in the previous financial year. But, markets managed to trim most of losses in late afternoon trade, as traders found some solace with from domestic rating agency's report in which it has revised the growth estimate for Housing Finance Companies (HFCs) to 10-12 per cent for FY23 from an earlier projection of 9-11 per cent. It noted that the upwards revision of the growth of HFCs was in expectation of a continued improvement in disbursements. Meanwhile, SEBI has restructured its advisory committee on market data that recommends policy measures pertaining to securities market data access and privacy. Finally, the BSE Sensex fell 51.73 points or 0.09% to 58,298.80 and the CNX Nifty was down by 6.15 points or 0.04% to 17,382.00.

The US markets ended mostly in red on Thursday as traders seemed reluctant to make significant moves ahead of the release of the Labor Department's closely watched monthly jobs report on Friday. The report is expected to show employment increased by 250,000 jobs in July after jumping by 372,000 jobs in June. The unemployment rate is expected to hold at 3.6 percent. The strength of the jobs report could impact the outlook for interest rates, although the Federal Reserve will have much more data to digest before their next meeting in September. The Labor Department released a report showing a modest increase in first-time claims for US unemployment benefits in the week ended July 30th. The report showed initial jobless claims crept up to 260,000, an increase of 6,000 from the previous week's revised level of 254,000. Street had expected jobless claims to inch up to 259,000 from the 256,000 originally reported for the previous week. Meanwhile, the Commerce Department released a separate report showing the US trade deficit narrowed by more than expected in the month of June. The report showed the trade deficit narrowed to $79.6 billion in June from a revised $84.9 billion in May. Street had expected the trade deficit to shrink to $81.9 billion from the $85.5 billion originally reported for the previous month. The decrease in the size of the trade deficit came as the value of exports surged by 1.7 percent to $260.8 billion, while the value of imports edged down by 0.3 percent to $340.4 billion. On the sectoral front, gold stocks moved sharply higher on the day, rebounding along with the price of the precious metal. Biotechnology stocks also saw substantial strength, extending the rally seen on Wednesday. The NYSE Arca Biotechnology Index jumped by 2.7 percent to its best closing level in well over three months.  

Crude oil futures ended lower on Thursday, magnifying their previous session's losses, as fears surged over a global economic slowdown that could dent oil demand. Cleveland Federal Reserve Bank President Loretta Mester said that the risks of recession have risen. She reiterated the central bank's resolve to continue with aggressive tightening until there is compelling evidence of a let up in inflation. However, oil prices rose early on in the session as the dollar weakened but failed to hold gains, weighed down by Wednesday's data that showed an unexpected surge in crude stockpiles in the US last week and the oil producer group OPEC+'s nod for a small increase in production. Benchmark crude oil futures for September delivery fell $2.12 or 2.3 percent to settle at $88.54 a barrel on the New York Mercantile Exchange. Brent crude for October delivery dropped $$2.66 or 2.8 percent to settle at $94.12 a barrel on London's Intercontinental Exchange.

Tumbling for second straight session, rupee ended considerably lower against dollar on Thursday amid US-China tensions. Traders also remained on edge ahead of the Reserve Bank of India's (RBI's) monetary policy outcome on August 05. Sentiments were fragile as government data showed that India's foreign direct investment to gross domestic product ratio eased to 2.7% in fiscal year ending March. 31, 2022 from 3.1% in the previous financial year. On the global front, dollar slipped against most major currencies on Thursday as the positive impact of hawkish Federal Reserve comments faded and investors waited for more signs on the data front to confirm that larger rate hikes to curb inflation were coming. Finally, the rupee ended at 79.40 (provisional), weaker by 25 paisa from its previous close of 79.15 on Wednesday.

The FIIs as per Thursday's data were net buyers in both equity and debt segments. In equity segment, the gross buying was of Rs 10000.77 crore against gross selling of Rs 6033.19 crore, while in the debt segment, the gross purchase was of Rs 58.39 crore against gross selling of Rs 19.01 crore. Besides, in the hybrid segment, the gross buying was of Rs 32.14 crore against gross selling of Rs 43.87 crore.

The US markets ended mostly lower on Thursday as gains in high-growth stocks offset losses in energy shares. Asian markets are trading mostly in green on Friday as China conducts military exercises around Taiwan. Indian benchmarks snapped their six-session rally to close marginally lower on Thursday amid profit booking in banking and energy counters. Today, markets are likely to get flat-to-positive opening ahead of the Reserve Bank of India's (RBI's) monetary policy outcome later in the day amid positive cues from Asian counterparts. The central bank is likely to rise rates by 35-50 bps today as India's headline inflation continues to be 7 per cent plus, way above the bank's upper end of the tolerance band. Some support will come as foreign institutional investors (FIIs) net bought shares worth Rs 1,474.77 crore on August 4, as per provisional data available on the NSE. Traders may take note of report that Commerce and industry minister Piyush Goyal is likely to meet export promotion councils on Friday to discuss the country's export performance, targets and various trade agreements India is currently negotiating. However, some cautiousness may come with the report by the SBI Research Ecowrap stating that India's fiscal deficit in the current financial year is expected to come around 6.5 per cent, as against the budget estimate of 6.4 per cent. Fiscal deficit for Q1FY23 has reached 21.2 per cent of the annual target compared to 18.2 per cent in Q1 FY22. Besides, to maintain external sector balance at a comfortable level over the medium term, the International Monetary Fund (IMF) has recommended that India should gradually withdraw its fiscal and monetary policy stimulus, develop export infrastructure, and negotiate free-trade agreements with key trading partners to provide a sustainable boost to exports. Meanwhile, SEBI has amended mutual fund rules to remove the applicability of the definition of associate to sponsors that invest in various companies on behalf of the beneficiaries of insurance policies. The new rules will become effective from September 3. Telecom industry stocks will be in focus with report that within days of conducting 5G auctions, Telecom Minister Ashwini Vaishnaw has said the government has completed the spectrum harmonisation process, paving the way for players' holdings to be streamlined within a particular band for greater efficiency. There will be lots of earnings announcements too, to keep the markets in action.

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

Nifty Top volumes

• Bharti Airtel has signed 5G network agreements with gear makers Ericsson, Nokia and Samsung to commence deployment in August.  
• SBI has set up a wholly owned subsidiary named State Bank Operations Support Services for providing support services and Business Correspondent activities to SBI branches and RACCs in rural and semi urban areas, as approved by RBI. 
• Coal India has dispatched 152.49 MT of coal to Power Sector in the first quarter of the current fiscal surpassing all the previous highs of the same period.
• Gail (India) has reported 50.71% rise in its consolidated net profit at Rs 3,250.95 crore for Q1FY23 as compared to Rs 2,157.15 crore for the same quarter in the previous year.