Indian equity benchmarks ended at a record closing high for the second consecutive day on Wednesday with the Nifty 50 index surpassed its important psychological level of 16,250 and Sensex topped 54,300-mark for the first time on hopes of faster economic recovery. Markets made a positive start and traded jubilantly for most part of the session, as traders found support with ratings agency ICRA's statement that IT services companies are expected to see growth in revenue, driven by robust demand for digital technologies resulting in higher awards of contracts. Further, the growth in the financial year 2021-22 will be supported by the pent-up demand of the financial year 2020-21 that was lower due to the initial impact of COVID-19. Additional optimism came with private report that India's recruitment activity has been recovering steadily as the hiring rate in June 2021 was around 42 percent above the pre-pandemic levels in 2019. However, markets cut some of their gains in late morning session after India's services sector remained in contraction territory for the third straight month in July, as business activity, new orders and employment declined further largely due to the COVID-19 pandemic and local restrictions. The seasonally adjusted India Services Business Activity Index rose from 41.2 in June to 45.4 in July, but was stuck in the red due to subdued demand conditions amid the COVID-19 crisis. Some concern also came as the government expects the total debt as percentage of gross domestic product (GDP) to increase to 61.7 per cent (provisional) in 2021-22 (FY22) from 60.5 per cent (provisional) in the previous fiscal. At the same time, public debt would rise to 54.2 per cent in the current financial year from 52 per cent in 20. But, markets regained traction to scale fresh highs, following strong quarterly results from corporates and positive cues from global equities. Traders remained energized as Union Minister of State for Consumer Affairs, Food and Public Distribution, Ashwini Kumar Choubey in a written reply to Lok Sabha informed that as per the National Association of Software & Services Companies (NASSCOM), India's e-commerce market continues to grow at the rate of five percent with estimated revenue of $56.6 billion in the financial year 2021 despite COVID-19 challenges. Finally, the BSE Sensex rose 546.41 points or 1.02% to 54,369.77, while the CNX Nifty was up by 128.05 points or 0.79% to 16,258.80. 

The US markets ended mostly lower on Wednesday on renewed concerns about the pace of US economic growth after payroll processor ADP released a report showing private sector employment increased by much less than expected in the month of July. ADP said private sector employment rose by 330,000 jobs in July after surging by a downwardly revised 680,000 jobs in June. Street had expected private sector employment to spike by 695,000 jobs compared to the jump of 692,000 jobs originally reported for the previous month. Besides, a steep drop by shares of General Motors (GM) also weighed on Markets, with the auto giant plunging by 8.9 percent to a five-month closing low. The decline by GM came after the company reported second quarter earnings missed street estimates, although the automaker still raised its full-year guidance. However, the negative sentiment was partly offset by a report from the Institute for Supply management (ISM) showing growth in US service sector activity accelerated much more than expected in July. The ISM said its services PMI jumped to an all-time high of 64.1 in July after pulling back to 60.1 in June, with a reading above 50 indicating growth in the sector. Street had expected the index to inch up to 60.4. The bigger than expected increase by the headline index came as the business activity index surged up to 67.0 in July from 60.4 in June. The new orders index also climbed to 63.7 in July from 62.1 in June, while the employment index rebounded to 53.8 in July from 49.3 in June.

Crude oil futures ended deeply in red on Wednesday, extending the sharp pullback seen over the two previous sessions, on a surprise build in US crude stockpiles and as the spread of the coronavirus Delta variant outweighed the impact of Mideast geopolitical tensions. The US Energy Information Administration (EIA) said crude stockpiles rose 3.6 million barrels during the week ended July 30, while street had expected inventories to decrease by 3.1 million barrels. The EIA said distillate fuel inventories also edged up by 0.8 million barrels, although gasoline inventories tumbled by 5.3 million barrels. Crude oil futures for September fell $2.41 or 3.4 percent to settle $68.15 barrel on the New York Mercantile Exchange. October Brent crude dropped $2.03 or 2.8 percent to settle at $70.38 a barrel on London's Intercontinental Exchange.

Rising for third straight session, Indian rupee strengthened substantially against dollar on Wednesday, owing to dollar sale by exporters and banks and healthy gains in domestic equity markets. Sentiments remained positive as ICRA stated that the IT services companies are expected to see growth in revenue, driven by robust demand for digital technologies resulting in higher awards of contracts. Traders ignored report that India's service sector remained into contraction territory in the month of July, largely due to the COVID-19 pandemic and local restrictions. As per the survey report, the seasonally adjusted Nikkei Services Business Activity Index stood at 45.4 in July from 41.2 in June. On the global front, sterling ticked higher against the dollar on Wednesday, buoyed by risk sentiment in markets, optimism over the outlook for COVID-19 in Britain, and anticipation of a hawkish turn from the Bank of England when it meets on Thursday. Finally, the rupee ended 74.19, stronger by 9 paise from its previous close of 74.28 on Tuesday.

The FIIs as per Wednesday's data were net buyer in equity segment, while net seller in debt segment. In equity segment, the gross buying was of Rs 9016.07 crore against gross selling of Rs 6918.02 crore, while in the debt segment, the gross purchase was of Rs 286.41 crore against gross selling of Rs 757.02 crore. Besides, in the hybrid segment, the gross buying was of Rs 6.08 crore against gross selling of Rs 22.75 crore.

The US markets ended mostly lower on Wednesday after the vice-chair of the Federal Reserve suggested rates could rise by 2023 and mixed economic data for July showed US companies adding far fewer jobs than expected. Asian markets are trading mostly in green on Thursday despite hawkish remarks from a senior official at the US Federal Reserve that boosted the dollar while weighing on risk appetite, and uncertainty about Chinese policy. Indian markets ended at record closing highs Wednesday led by financial stocks. However, broader markets, midcap and small cap indices underperformed the front-liners to end a percent lower each. Today, the start of session is likely to be cautious, after two days of relentless gains, amid mixed global cues. High volatility could be in store on account of weekly F&O expiry. Some respite may come later in the day with report that Spain has opened its doors to fully vaccinated Indians, joining France, Germany and Switzerland that did so a few weeks earlier. Delhi said on Wednesday it had recorded no death from Covid-19 in 24 hours: the fifth time it happened so in the second wave of the pandemic. Some support will come as Industry chamber PHDCCI called for a 3-tier GST rate structure, with the highest slab at 18 per cent, to help boost consumption and reduce evasion. It said this rationalisation of rates will increase consumption and tax revenue, reduce compliances, reduce tax evasion and help to make GST as good and simple tax, as simplified tax regime is the need of hour to reduce litigation pertaining to tax matters. Traders may take note of a private survey report stating that digital adoption by small businesses accelerated since the outbreak of Covid-19, with as many as 64 per cent micro small and medium enterprises' (MSMEs) sales through online channels growing over the last 12 months. Meanwhile, the Reserve Bank of India (RBI) gave banks time till October 31 to comply with its guidelines on current account and overdraft facilities, by which time banks must come to a resolution on the issue. Primary market activity is also likely to remain heightened as all the issues will open for subscription on Day 2. Exxaro Tiles IPO was subscribed 4.63 times on Day 1, Windlas Biotech 3.15 times, Devyani International 2.69 times and Krsnaa Diagnostics 1.16 times.

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

Nifty Top volumes

• Dr. Reddy's Laboratories has re-launched of OTC Naproxen Sodium Tablets USP, 220 mg, the store-brand equivalent of Aleve, in the US market, as approved by the USFDA. 
• HDFC Bank's Parivartan - its umbrella programme for social initiatives - impacted lives of over 30.4 lakh people in Gujarat in 2020-21.
• Bharti Airtel has become the market leader in India's fast-growing Enterprise IoT segment as per Frost & Sullivan. 
• Tata Motors has launched the all-new Tiago NRG.