In a volatile session, Indian equity benchmarks ended lower on Wednesday dragged by Banking, Metal and Industrials stocks. Markets made pessimistic start as traders were cautious with a private report that foreign direct investment (FDI) inflows into the country fell 16% to $71 billion (on a gross basis) during 2022-23 on the back of a weak global economic situation, marking the first decline in a decade. However, key gauges erased losses and traded higher in morning deals, as traders took support with the SBI's research report Ecowrap stating that the withdrawal of Rs 2000 currency note is likely to be a non-event but it will have a favourable bearing on liquidity, bank deposits and interest rates. It expects that almost the entire amount of Rs 3.6 lakh crore in the form of Rs 2000 will come back to the banking system. Some support also came with the provisional data available on the NSE showed Foreign institutional investors (FII) bought shares worth net Rs 182.51 crore on May 23. However, buying proved short-lived as markets once again entered into red terrain in afternoon deals, amid weakness in global markets as the overhang of the US debt ceiling negotiation influenced sentiments. Traders overlooked Commerce and industry Minister Piyush Goyal's statement that India has a strong foreign exchange reserve and the country is in a comfortable position to meet all the requirements even in any worst-case scenario in the next five-six years. Traders took a note of Moody's Investors Service in its latest research report said that India's Gross Domestic Product (GDP) has crossed $3.5 trillion in 2022 and will be the fastest-growing G-20 economy over the next few years, but reform and policy barriers could hamper investment. Finally, the BSE Sensex fell 208.01 points or 0.34% to 61,773.78 and the CNX Nifty was down by 62.60 points or 0.34% to 18,285.40.

The US markets ended lower on Wednesday as talks between the White House and Republican representatives on raising the U.S. debt ceiling dragged on without a deal. The lack of progress on raising the U.S. government's $31.4 trillion debt limit ahead of a June 1 deadline, with several rounds of inconclusive talks, has made investors edgier as the risk of a catastrophic default looms larger. Cautiousness also prevailed in the markets as the Federal Reserve released the minutes of its May monetary policy meeting, indicating uncertainty about the outlook for interest rates. The minutes revealed participants generally agreed that in light of the lagged effects of cumulative tightening in monetary policy and the potential effects on the economy of a further tightening in credit conditions, the extent to which additional rate hikes may be appropriate had become less certain. Some participants felt additional rate increases would likely to be warranted at future meetings due to expectations that progress in returning inflation to 2 percent could continue to be unacceptably slow. Meanwhile, several others noted that if the economy evolved along the lines of their current outlooks, then further rate hikes may not be necessary. On the sectoral front, gold stocks showed a substantial move to the downside on the day, dragging the NYSE Arca Gold Bugs Index down by 2.2 percent to a two-month closing low. The weakness among gold stocks came amid a decrease by the price of the precious metal, with gold for June delivery falling $9.90 to $1,964.60 an ounce. Considerable weakness was also visible among steel stocks, as reflected by the 2.2 percent slump by the NYSE Arca Steel Index. The index tumbled to its lowest closing level in five months.

Crude oil futures settled higher on Wednesday, extending recent gains. Data showing a larger than expected drop in crude inventories in the U.S. last week pushed up oil prices. Data released by the Energy Information Administration (EIA) showed crude inventories fell by 12.456 million barrels in the week ended May 19. Gasoline inventories fell 2.053 million barrels last week, as against forecasts for a drop of 0.695 million barrels. Meanwhile, distillates stockpiles fell by a modest 0.562 million barrels, as against forecasts for an increase of 0.057 million barrels. Further, Oil prices were also supported by a warning from Saudi Arabia's energy minister on Tuesday that oil prices may not continue to decline. Benchmark crude oil futures for June delivery surged $1.43 or about 2 percent to settle at $74.34 a barrel on the New York Mercantile Exchange. Brent crude for July delivery rose $1.52 or 2 percent to settle at $78.36 a barrel on London's Intercontinental Exchange.

Indian Rupee ended higher against the US dollar on Wednesday supported by foreign capital inflows. Traders got support with Commerce and industry Minister Piyush Goyal's statement that India has a strong foreign exchange reserve and the country is in a comfortable position to meet all the requirements even in any worst-case scenario in the next five-six years. On the global front, dollar on Wednesday held just shy of a two-month high as U.S. debt ceiling negotiations dragged on, while the pound firmed and then softened after stronger-than-expected British inflation data. Finally, the rupee ended at 82.70 (Provisional), stronger by 15 paise from its previous close of 82.85 on Tuesday.

The FIIs as per Wednesday's data were net buyers in both equity and debt segment. In equity segment, the gross buying was of Rs 7702.31 crore against gross selling of Rs 7382.93 crore, while in the debt segment, the gross purchase was of Rs 893.95 crore against gross selling of Rs 765.56 crore. Besides, in the hybrid segment, the gross buying was of Rs 13.33 crore against gross selling of Rs 15.25 crore.

The US markets ended lower on Wednesday after Fitch Ratings placed the United States' AAA rating on a negative watch list, stating that the ongoing debt ceiling negotiations have raised the risks that the government could miss payments on some of its obligations. Asian markets are trading mostly in red on Thursday tracking overnight losses on Wall Street. Indian markets ended lower on Wednesday as investors sold metal, financial, and Adani group shares. Today, start of the monthly F&O expiry is likely to be negative amid weak global cues as clouds hover on US debt ceiling talks ahead of the June 1 deadline. Traders will be concerned as the RBI data showed that gross foreign direct investment (FDI) flows, for the first time in a decade, declined on an annual basis in 2022-23 to $71 billion mainly due to a slowdown in the global economy. However, some respite may come later in the day as Reserve Bank Governor Shaktikanta Das said the growth for 2022-23 is expected to be more than the advance estimate of 7 per cent on the back of economic momentum maintained in the third and fourth quarters of the last fiscal. Traders may take note of Commerce and industry Minister Piyush Goyal's statement that India has a strong foreign exchange reserve and the country is in a comfortable position to meet all the requirements even in any worst-case scenario in the next five-six years. According to the Reserve Bank of India, India's forex kitty jumped $3.553 billion to $599.529 billion for the week ended May 12. Besides, the commerce ministry is trying to address issues pertaining to the promotion of exports through ecommerce medium. Director General of Foreign Trade (DGFT) Santosh Kumar Sarangi also said that while the $2 trillion export target by 2030 is ambitious as it entails an annual growth of 14.5 per cent (CAGR), it is not impossible. Meanwhile, exports of broken rice will be allowed on the basis of permission given by the government for shipments to other countries for meeting their food security needs. In general, the export of broken rice is banned. IT stocks will be in focus as S&P Global Ratings believe that Indian IT firms could see revenue decelerate by 5 per cent through FY25. Macroeconomic concerns, along with a cautious approach towards discretionary information technology (IT) spending, will likely impact the revenue. Moreover, investors await more of financial results from India Inc for domestic cues, with Vodafone Idea, Indian Energy Exchange, SAIL, Zee Entertainment, and Page Industries due to post their earnings later in the day.

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

Nifty Top volumes

• State Bank of India's non-life insurance arm -- SBI General Insurance has launched General Surety Bond Bima (Conditional & Unconditional), insurance product. 
• Infosys has collaborated with Adobe to transform the digital workforce through Infosys' online learning platform, Infosys Springboard, under its Tech for Good charter. 
• M&M has sold its entire stake comprising of 1,21,22,068 Equity Shares representing 3.195% of the paid-up share capital of Mahindra CIE Automotive. 
• Hindalco Industries has reported 37.39% fall in its consolidated net profit at Rs 2411 crore for Q4FY23 as compared to Rs 3851 crore for the same quarter in the previous year.