Indian equity benchmarks retreated from the record highs and settled lower on Wednesday, as heavyweight stocks such as ITC, Reliance Industries and Bajaj Finance witnessed sharp profit booking. That apart, weak global cues heavily weighed on the investor sentiment. Markets were trading flat for most part of the day, as traders were cautious with the World Bank in its Global Economic Prospects report has stated that India's economy is estimated to contract by 9.6 per cent in the fiscal year 2020-21 (FY21), reflecting a sharp drop in household spending and private investment. Report said that the informal sector, which accounts for four-fifths of employment, has been subject to severe income losses during the COVID-19 pandemic. In India, the pandemic hit the economy at a time when growth was already decelerating. Traders also took note of a Reserve Bank paper stating that an increase in credit may not always find its way towards investments as business entities may use credit lines to finance their current liabilities. Benchmarks added losses in late afternoon session, after India's services sector activity expanded at a slower pace in December as rates of growth in sales eased to a three-month low and staff hiring came to a halt amid weak business optimism. The seasonally adjusted India Services Business Activity Index fell from 53.7 in November to 52.3 in December. The index was above the critical 50 mark that separates growth from contraction for the third month in a row during December, but pointed to the slowest pace of expansion in the three-month sequence. However, markets managed to trim some losses as some optimism remained among traders with the Finance Ministry's report that approval of the long-awaited COVID-19 vaccine provides strength to the optimism on both health and economic fronts, despite continuing surge in global cases and the potential challenge of a mutant strain. Finally, the BSE Sensex fell 263.72 points or 0.54% to 48,174.06, while the CNX Nifty was down by 53.25 points or 0.38% to 14,146.25.

The US markets ended mostly higher on Wednesday as traders reacted to the results of the highly anticipated Georgia runoff elections on Tuesday. Democratic candidate Rev. Raphael Warnock is projected to win his race against Republican Senator Kelly Loeffler, while the race between Jon Ossoff and GOP Senator David Perdue is too close to call but the Democrat is in the lead. If Ossoff holds onto his narrow lead, the Senate would be split 50-50, with a tie-breaking vote by Vice President-elect Kamala Harris giving Democrats control of the chamber. However, the Nasdaq closed lower, as tech stocks could be hurt by the shift into cyclical stocks as well as the higher taxes sought by many Democrats. On the economic data front, a report released by the Commerce Department showed new orders for U.S. manufactured goods increased by more than expected in the month of November. The Commerce Department said factory orders surged up by 1.0 percent in November after jumping by an upwardly revised 1.3 percent in October. Street had expected factory orders to climb by 0.7 percent compared to the 1.0 percent increase originally reported for the previous month.  Meanwhile, with the impact of the coronavirus pandemic on the labor market intensifying, payroll processor ADP released a report showing an unexpected drop in private sector employment in the U.S. in the month of December. ADP said private sector employment fell by 123,000 jobs in December after jumping by a downwardly revised 304,000 jobs in November. The decrease surprised participants, who had expected employment to climb by about 88,000 jobs compared to the addition of 307,000 jobs originally reported for the previous month.  

Crude oil futures ended higher on Wednesday as weekly US crude supplies dropped by 8 million barrels, down a fourth straight week. The Energy Information Administration (EIA) reported that US crude inventories fell by 8 million barrels for the week ended January 1. That compared with the decline of 1.2 million barrels forecast by IHS Markit analysts. The American Petroleum Institute on Tuesday reported a 1.7 million-barrel fall in crude supplies. Besides, oil prices also continued to find support from Saudi Arabia's announcement Tuesday of a unilateral production cut. Crude oil futures for February rose 70 cents or 1.4 percent to settle at $50.63 a barrel on the New York Mercantile Exchange. March Brent crude gained 70 cents or 1.3 percent to settle at $54.30 a barrel on London's Intercontinental Exchange.

Erasing previous session drubbing, Indian rupee ended higher against dollar on Wednesday, on persistent selling of the American currency by exporters. Traders took some solace as the finance ministry said the impending vaccination drive in various countries, coupled with sustained improvement in high frequency indicators, helped the economy perform better in H2FY21. However, upside remain capped as World Bank in its Global Economic Prospects report states that India's economy is estimated to contract by 9.6 per cent in the fiscal year 2020-21 (FY21), reflecting a sharp drop in household spending and private investment. On the global front, pound edged higher for a second consecutive session on Wednesday as the U.S. dollar weakened after Democrats took the lead in runoff votes that will determine control of the U.S. Senate. Finally, the rupee ended at 73.11, 6 paise stronger from its previous close of 73.17 on Tuesday.

The FIIs as per Wednesday's data were net seller in equity segment, while net buyer in debt segment. In equity segment, the gross buying was of Rs 7273.61 crore against gross selling of Rs 7466.86 crore, while in the debt segment, the gross purchase was of Rs 605.71crore with gross sales of Rs 416.94 crore. Besides, in the hybrid segment, the gross buying was of Rs 6.86 crore against gross selling of Rs 8.99 crore.

The US markets ended mostly higher on Wednesday after swarms of protesters stormed the US Capitol as they sought to force Congress to undo President Donald Trump's election loss to Joe Biden. Asian markets are trading in green on Thursday as investors remained confident that violence in Washington would not disrupt a legitimate transition to a new presidency or derail political support for a US economic recovery. Indian markets ended lower on Wednesday dragged by selling in IT and FMCG stocks amid mixed global cues. Today, the start of session is likely to be optimistic tracking firm Asian cues. Some support will come with report that the currency in circulation (CIC) expanded by 22.1 per cent in calendar year 2020, as people hoarded cash at a time when the nation went into a lockdown and uncertainty prevailed over how liquidity needs would be met. Data released by the Reserve Bank of India showed that in calendar year 2020, the currency in circulation growth was way higher than 2019's 11.8 per cent growth rate. However, there may be some cautiousness with rising coronavirus cases in the country. With 20,460 fresh Covid-19 cases, India's caseload now stands at 10,395,938. The country's death toll has mounted to 150,372. Meanwhile, the number of people who have tested positive for the new UK variant of SARS-CoV-2 in the country has climbed to 73. Meanwhile, digital services taxes adopted by India, Italy and Turkey discriminate against U.S. companies and are inconsistent with international tax principles, the US Trade Representative's office said on Wednesday, paving the way for potential retaliatory tariffs. There will be some buzz in NBFCs stocks with ICRA's report that non-banking finance companies (NBFCs) are likely to see a 7-9 per cent growth in their asset under management (AUM) in FY2022 but access to funding would be crucial for them to have a sustained improvement. Telecom stocks will in focus after the government said it will auction wireless spectrum in seven bands on March 01. Spectrum will be offered in seven frequency bands of 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz, and 2500 MHz. There will be some reaction in auto stocks with a private report stating that the demand recovery for automobiles continued in the December quarter, with strong momentum witnessed in retail sales of tractors and passengers vehicles.

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

Nifty Top volumes

• HDFC is planning to raise up to Rs 5,000 crore by issuing bonds on private placement basis to meet its business requirements. 
• Kotak Mahindra Bank's subsidiary -- Kotak Securities is setting aside a corpus of Rs 50 crore to invest in startups and financial technology companies.  
• ONGC is planning to raise Rs 1,500 crore on private placement basis, through the issuance of unsecured, listed, redeemable, non-cumulative, taxable, NCDs. 
• Tata Steel has collaborated with CII Green Business Centre and relevant stakeholders in the Indian Steel sector to develop GreenPro framework for steel rebars, for first time in India.