Indian equity benchmarks edged lower by over half percent on Wednesday, following intense selling in Power Grid, Indusind Bank and Reliance Industries taking cues from subdued trading in other Asian markets. Benchmarks made cautious start, as Global forecasting firm Oxford Economics has said retail inflation spike in May might cause the RBI to revisit its focus on growth risks, adding that a rate hike is still unlikely this year. It stated that the underlying dynamics of the May inflation print augur caution and the recovery remains on uncertain ground and with fiscal support in retreat, the RBI will likely be hesitant to remove policy accommodation anytime soon. Selling further crept in after State Bank of India's research division said that driven by several global and domestic factors, inflation may remain elevated in the coming months. Soumya Kanti Ghosh, Group Chief Economic Adviser at SBI, said that faster-than-anticipated and robust recovery in some advanced countries is likely to exert upward pressure on international commodity prices, including crude oil. Trading sentiments remained weak in late afternoon session even as a private report stated that financial wealth in India grew 11% to $3.4 trillion in 2020 despite the coronavirus pandemic. The 11% growth in financial wealth was at par with the compounded annual growth rate for the five years to 2020. Market participants also paid no heed towards data showing that India's merchandise exports rose by 69.35% in May 2021 as compared to same period of last year, on account of healthy growth in sectors such as engineering, petroleum products and gems and jewellery, even as trade deficit dropped to an eight-month low of $6.28 billion. Exports stood at $19 billion in May last year and at $29.85 billion in May 2019.  Meanwhile, the government has simplified the registration process for micro, small and medium enterprises (MSMEs) and they will now only need to furnish PAN and Aadhaar to register. Finally, the BSE Sensex fell 271.07 points or 0.51% to 52,501.98, while the CNX Nifty was down by 101.70 points or 0.64% to 15,767.55.

The US markets ended lower on Wednesday after the Federal Reserve made its highly anticipated monetary policy announcement, and while the statement was largely unchanged from the previous meeting, the central bank's latest projections now point to an increase in interest rates in 2023. The latest projections from Fed officials suggest interest rates will be increased to 0.6 percent in 2023 compared to previous projections indicating rates would remain at near-zero levels. Seven officials expect a rate hike as soon as 2022. The forecast for higher rates in 2023 comes as the median estimate for GDP growth in the year was raised to 2.4 percent from the 2.2 percent forecast in March. Core consumer price inflation is still expected to increase by 2.1 percent in 2023. The new estimates also point to 7.0 percent GDP growth in 2021 versus the previously estimated 6.5 percent, with core consumer price inflation expected to reach 3.0 percent compared to the previously forecast 2.2 percent. The Fed reiterated that indicators of economic activity and employment have strengthened, citing progress on Covid-19 vaccinations and strong policy support. The statement also acknowledged rising inflation but once again largely attributed the increase to transitory factors. The central bank also said it plans to continue its bond purchases at a rate of at least $120 billion per month until substantial further progress has been made toward its goals of maximum employment and price stability.

Crude oil futures ended marginally higher on Wednesday despite data showing a larger than expected drop in crude inventories last week. Data released by US Energy Information Administration (EIA) showed crude stockpiles fell by 7.36 million barrels last week (June, 11), much more than an expected drop of about 2.5 million barrels. The data showed gasoline stockpiles rose by 1.9 million barrels last week and distillate inventories dropped by 1.02 million barrels versus anticipated declines of 1 million barrels and 0.5 million barrels, respectively. The American Petroleum Institute (API) released a report on Tuesday showing a drop of 8.5 million barrels in crude inventories in the US in the week ended June 11. Crude oil futures for July added 3 cents to settle at $72.15 barrel on the New York Mercantile Exchange. August Brent crude gained 40 cents or 0.5 percent to settle at $74.39 a barrel on London's Intercontinental Exchange.

Indian rupee ended marginally weaker against the US dollar on Wednesday as sentiments were weighed ahead of the US Federal Reserve's interest rate decision. Traders were also concerned as global forecasting firm Oxford Economics said retail inflation spike in May might cause the RBI to revisit its focus on growth risks, adding that a rate hike is still unlikely this year. However, downfall remain capped as India's merchandise exports rose by 69.35% in May 2021 as compared to same period of last year, on account of healthy growth in sectors such as engineering, petroleum products and gems and jewellery, even as trade deficit dropped to an eight-month low of $6.28 billion. On the global front, sterling strengthened against the euro and dollar on Wednesday after data showed British inflation unexpectedly jumped above the Bank of England's 2% target in May, sparking some concerns that policymakers may start signaling a shift in policy thinking if prices shoot up further. Finally, the rupee ended 73.32, weaker by 1 paise from its previous close of 73.31 on Tuesday.

The FIIs as per Wednesday's data were net buyer in both equity and debt segment. In equity segment, the gross buying was of Rs 7583.62 crore against gross selling of Rs 6903.85 crore, while in the debt segment, the gross purchase was of Rs 730.11 crore with gross sales of Rs 559.06 crore. Besides, in the hybrid segment, the gross buying was of Rs 5.59 crore against gross selling of Rs 13.55 crore.

The US markets ended lower on Wednesday as US Federal Reserve officials unnerved investors with indications that the central bank could begin rising interest rates in 2023, a year earlier than expected. Asian markets are trading mostly in red on Thursday after Federal Reserve officials sped up their expected pace of policy tightening. Indian markets ended Wednesday's session down about half a percent as oil extended its winning run to breach the $74 per barrel mark. Today, the start of session is likely to be gap-down amid weakness in global markets. Traders will be concerned as India reported 62,224 new Covid-19 cases on Wednesday, taking the total to 29,633,105. The death count climbed to 3,79,573 with 2,542 fresh fatalities. Besides, the government has defended its decision to double the gap between the two doses of the Covishield vaccine to up to 16 weeks, after three scientific advisers said there was no agreement on such a wide interval. There will be some cautiousness as the SBI's research report- Ecowrap stated that with retail inflation witnessing significant uptick in May, the Reserve Bank of India (RBI) is likely to maintain status quo in its August monetary policy review. Some respite may come later in the day with preliminary data of the commerce ministry showing that India's exports rose by 46.43 per cent to $14.06 billion during June 1-14 on account of healthy growth in shipments in sectors such as engineering, gems and jewellery and petroleum products. Imports too rose by 98.33 per cent to $19.59 billion during the period. Some support may come as Ministry of Finance said the direct tax collections for FY22, as on June 15, 2021 show that net collections are at Rs 1.85 trillion as compared to Rs 92,762 crore over the corresponding period of the preceding year, representing an increase of 100.4% over the collections of the preceding year. Traders may take note of report that the Reserve Bank of India (RBI) saw reasons to be cautiously optimistic as the second wave of the pandemic seemed to have hit the domestic demand, while other economic indicators show the economy is coming back on-stream. There will be some reaction in fertilizer industry stocks as the Union Cabinet raised the subsidies for DAP and some other non-urea fertilisers by Rs 14,775 crore to keep the price of crop nutrients for farmers low despite the rising costs. The move will also help in providing relief to the farmers amid the pandemic.

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

Nifty Top volumes

• Bharti Airtel has upgraded its mobile network in Odisha by deploying an additional 5 Mhz of spectrum in the superior 900 MHz band for high-speed 4G services to enhance indoor coverage. 
• ICICI Bank has raised over Rs 2,827 crore by allotting 28,274 senior unsecured redeemable long-term bonds in the nature of debentures on a private placement basis.  
• Reliance Industries' telecom arm -- Reliance Jio Infocomm is all set to start Jiofiber post-paid broadband service from June 17 without charging installation fee on new connections. 
• Wipro has joined the World Economic Forum's Partnership for New Work Standards initiative to establish a healthy, resilient and equitable future of work.