Indian equity benchmarks snapped a two-day gaining streak to end Wednesday's session nearly a percent lower mirroring losses in global markets as oil prices hit their highest level in seven years, fuelling concerns about rising inflation. Benchmark indices made a positive opening, as sentiments got a boost with Moody's Investors Service changed its outlook on India's sovereign ratings to stable from negative. Besides, it retained the ratings, both on foreign and domestic currencies, at Baa3. However, the benchmarks witnessed a sharp decline in the second half of the session with a spike in volatility coupled with profit booking at higher levels. Cautiousness also came after the Bombay Chamber of Commerce and Industry's survey found that an overwhelming number of exporters are worried about competitiveness as global trade picks up pace after the ravages of the pandemic. Sentiments remained down-beat in late hour of trading session, after the International Monetary Fund (IMF) expects global economic growth in 2021 to fall slightly below its July forecast of 6%, citing risks associated with debt, inflation and divergent economic trends in the wake of the Covid-19 pandemic. Traders took a note of Care Ratings' report stated that the weighted average cost for borrowing across the states and maturities has risen to a two-month high of 6.91 per cent, up 6 basis points (bps) over the past week. According to the report, the rise in the yields of state bonds follows the uptick in yields of government securities (G-Secs) in recent days. Meanwhile, Reserve Bank's rate-setting panel started its three-day deliberations on the next bi-monthly monetary policy on Wednesday amid rising global commodity prices and the need to contain inflation at home. Finally, the BSE Sensex fell 555.15 points or 0.93% to 59,189.73 and the CNX Nifty was down by 176.30 points or 0.99% to 17,646.00.

The US markets ended higher on Wednesday following reports that Senate Minority Leader Mitch McConnell, R-Ken., has offered to allow a temporary extension of the debt limit.  McConnell said Republicans would allow Democrats to use normal procedures to pass an emergency debt limit extension at a fixed dollar amount to cover current spending levels into December. McConnell said this will moot Democrats' excuses about the time crunch they created and give the unified Democratic government more than enough time to pass standalone debt limit legislation through reconciliation. He added alternatively, if Democrats abandon their efforts to ram through another historically reckless taxing and spending spree that will hurt families and help China, a more traditional bipartisan governing conversation could be possible. The offer from McConnell comes as lawmakers are facing an October 18th deadline to raise the debt limit and avoid a potential default. On the economic data front, payroll processor ADP released a report showing stronger than expected private sector job growth in the month of September. ADP said private sector employment jumped by 568,000 jobs in September after rising by a downwardly revised 340,000 jobs in August. Street had expected private sector employment to climb by 428,000 jobs compared to the addition of 374,000 jobs originally reported for the previous month.

Crude oil futures ended lower on Wednesday, coming of multi-year highs, on concerns about slowing economic growth, high inflation and fears of interest rate hikes from central banks. Further, data showing an increase in US crude inventories has raised concerns over slowing fuel demand. Data released by US Energy Information Administration (EIA) showed crude stockpiles increased by 2.35 million barrels last week (October 1) versus expectations for a drop of 418,000 barrels. Gasoline inventories increased by 3.26 million barrels in the week ended October 1, while distillates stockpiles dropped by 396,000 barrels in the week. The report also said crude production increased to 11.3 million barrels per day. A report released by the American Petroleum Institute on Tuesday showed US crude inventories rose by 951,000 barrels in the week to October 1. Benchmark Crude oil futures for November delivery dropped $1.50 or about 1.9 percent to settle at $77.43 barrel on the New York Mercantile Exchange. Brent crude for December delivery fell $1.48 or about 1.79 percent to settle at $81.08 a barrel on London's Intercontinental Exchange.

Continuing previous session losses, Indian rupee ended substantially weaker against dollar on Wednesday as spike in global crude oil prices re-ignited concerns over imported inflation and a drop in other Asian currencies weighed on investor sentiment. Also, losses in Indian equity markets also dented traders' mood. Sentiments were fragile as International Monetary Fund expects global economic growth in 2021 to fall slightly below its July forecast of 6%, citing risks associated with debt, inflation and divergent economic trends in the wake of the COVID-19 pandemic. Additional pessimism also came after Bombay Chamber of Commerce and Industry's survey found that an overwhelming number of exporters are worried about competitiveness as global trade picks up pace after the ravages of the pandemic. On the global front; dollar rose on Wednesday amid nervousness that surging energy prices could spur inflation and interest rate hikes, and as traders awaited U.S. jobs data for clues on the timing of Federal Reserve policy tightening. Finally, the rupee ended 74.98, weaker by 54 paise from its previous close of 74.44 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 8403.57 crore against gross selling of Rs 7816.09 crore, while in the debt segment, the gross purchase was of Rs 669.01 crore against gross selling of Rs 528.83 crore. Besides, in the hybrid segment, the gross buying was of Rs 10.15 crore against gross selling of Rs 29.92 crore.

The US markets ended higher on Wednesday as investors grew more optimistic that congressional Democrats and Republicans could reach a deal to avert a government debt default. Asian markets are trading in green on Thursday taking heart from a late recovery on Wall Street after US politicians appeared close to a temporary deal to avert a federal debt default and as Russia reassured Europe on gas supplies, calming volatile markets. Indian markets slumped 1 percent on Wednesday, tracking negative cues from the global markets. Today, the markets are likely to recover from previous session's fall with positive opening, tracking firm cues from global peers. Sentiments will get a boost as Moody's Investors Service said it will upgrade India rating if there is an increase in growth potential and sustained decline in government debt. The US-based rating agency had on Tuesday raised India's sovereign rating outlook to stable, from negative, while affirming the Baa3 rating - which is the lowest investment grade, just a notch above junk status. Traders may take note of report that Finance Minister Nirmala Sitharama said India is very close to arriving at the specifics of the two-pillar taxation proposition at the G20 and is in the last stage of finalising the details. Though, weekly F&O expiry will likely keep the markets volatile. There may be some cautiousness as India recorded a spike of 22,617 new Covid-19 cases in the past 24 hours. The country also witnessed 315 deaths, taking the death toll to 449,883. So far, India has recorded 33,893,002 corona cases in total. Meanwhile, SEBI has tweaked the norms pertaining to minimum percentages of monthly trades to be carried out by mutual funds on the Request For Quote (RFQ) platform of stock exchanges. Telecom stocks will be in focus as a licence amendment note issued stated that the Department of Telecom has slashed performance and financial bank guarantee requirement of telecom operators by 80 per cent. Additionally, the government has notified its decision to permit 100 per cent FDI under automatic route in the telecom services sector. There will be some buzz in aviation industry stocks as credit ratings agency Icra said India's domestic air passenger traffic grew marginally 2-3 per cent at around 69 lakh in September as compared to around 67 lakh in August. Textile industry stocks will be in limelight as the Union Cabinet approved the setting up of 7 Mega Integrated Textile Region and Apparel parks with a total outlay of Rs 4,445 crore for five years to position India strongly on the global textiles map.

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

Nifty Top volumes

• HDFC Bank has launched its Festive Treats 3.0 campaign which will provide over 10,000 offers on cards, loans, and easy EMIs.
• TCS' long-standing partnership with SBI has been extended for another five years as the bank embarks on its next leg of growth based on the three pillars of technology, resilience and people.
• Bharti Airtel and Ericsson have conducted India's first 5G network demonstration in a rural geography. 
• Kotak Mahindra Bank has launched an extensive multi-media marketing campaign to amplify the message of Kotak Home Loans starting at an astonishing interest rate of 6.5% per annum, one of the lowest in the market.