Indian equity benchmarks danced between gains and losses for most of the day and ended flat with a negative bias for second straight session on Wednesday on the back of weak cues from global equities. After making cautious start, markets dived deep into the red during the afternoon session, as traders got anxious with Fitch Ratings' statement that India continues to lag way behind in COVID vaccination, and the negative outlook on sovereign rating signifies the rising debt-to-GDP ratio. In April 2021, Fitch affirmed India's sovereign rating at BBB- with a negative outlook. The outlook was changed to negative from stable in June last year on grounds that the pandemic had significantly weakened the country's growth outlook and exposed the challenges associated with a high public-debt burden. However, the headline indices rebounded from lows in the dying hour of trade, taking support from report by India Ratings and Research (Ind-Ra) in which it has maintained a stable outlook on the banking sector for 2021-22 supported by the continuing systemic support that has helped manage the system-wide COVID-19 linked stress. While, it expects an increase in stressed assets in retail and MSME segments by end-March. It also estimates gross non-performing assets (GNPA) of the banking sector to be at 8.6 percent and stressed assets at 10.3 percent for fiscal 2021-22. Some support also came with a survey report stating that notwithstanding the COVID-19 second wave hitting the nation hard, Indian organisations have displayed resilience, and the salary increment is being projected to grow from an average of 8.8 per cent this year to an estimated average of 9.4 per cent in 2022. Meanwhile, with an aim to guard domestic manufacturers from cheap imports, the commerce ministry's investigation arm - the Directorate General of Trade Remedies (DGTR) has recommended the imposition of anti-dumping duty on Vitamin C, used by pharmaceutical firms for medicine production, from China. Finally, the BSE Sensex fell 29.22 points or 0.05% to 58,250.26 and the CNX Nifty was down by 8.60 points or 0.05% to 17,353.50.   

The US markets ended lower on Wednesday amid concerns about rapid spread of the delta variant of the coronavirus may slow the global economic recovery. Worries about the Federal Reserve scaling back its asset purchases also contributed to the selling pressure on the day. The lower close by markets also came after the Federal Reserve's Beige Book said US economic growth downshifted slightly to a moderate pace in early July through August. The Beige Book, a compilation of anecdotal evidence on economic conditions in each of the twelve Fed districts, said the deceleration in economic activity was largely attributable to a pullback in dining out, travel, and tourism in most districts. The deceleration in those sectors reflected safety concerns due to the rise of the Delta variant of the coronavirus, and, in a few cases, international travel restrictions. Meanwhile, the Fed said other sectors of the economy where growth slowed or activity declined were those constrained by supply disruptions and labor shortages, as opposed to softening demand. The Fed said in particular, weakness in auto sales was widely ascribed to low inventories amidst the ongoing microchip shortage, and restrained home sales activity was attributed to low supply.

Crude oil futures ended higher on Wednesday on reports about a slow progress in restoration of crude output in the Gulf of Mexico region. However, worries about the outlook for energy demand due to the surge in coronavirus cases, and a strong dollar limited oil's gains. The Energy Information Administration (EIA) said in its monthly Short-Term Energy Outlook report that it has lowered global oil demand expectations to account for reactions to the proliferation of the delta variant. The EIA expects global demand to grow by 5 million barrels per day this year, as against last month's forecast for a growth of 5.3 million barrels per day. EIA expects US crude oil output to be 11.08 million barrels per day, down 0.3% from the previous forecast. Crude oil futures for October rose $0.95 or 1.4 percent to settle $69.30 barrel on the New York Mercantile Exchange. November Brent crude surged $0.91 or 1.28% percent to settle at $72.60 a barrel on London's Intercontinental Exchange.

Continuing previous session losses, Indian rupee ended weaker against the US dollar on Wednesday, on increased demand for the greenback from importers and banks. Sentiments were fragile as Fitch Ratings said India continues to lag way behind in COVID vaccination, and the negative outlook on sovereign rating signifies the rising debt-to-GDP ratio. In April 2021, Fitch affirmed India's sovereign rating at BBB- with a negative outlook. The outlook was changed to negative from stable in June last year on grounds that the pandemic had significantly weakened the country's growth outlook and exposed the challenges associated with a high public-debt burden. Traders were also worried on concern that the delta coronavirus variant is slowing the economic recovery from the pandemic. On the global front' dollar rose to a one-week peak against peers on Wednesday, buoyed by higher Treasury yields and a weaker euro a day ahead of a European Central Bank policy decision. Finally, the rupee ended 73.60, weaker by 18 paise from its previous close of 73.42 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 7407.35 crore against gross selling of Rs 6764.81 crore, while in the debt segment, the gross purchase was of Rs 951.04 crore against gross selling of Rs 787.20 crore. Besides, in the hybrid segment, the gross buying was of Rs 34.16 crore against gross selling of Rs 44.73 crore.

The US markets ended lower on Wednesday following a Federal Reserve report that shows US economic activity slowed this summer amid rising worries over resurgent corona virus cases and mounting supply chain problems and labor shortages. Asian markets are trading mostly in red on Thursday following overnight declines on Wall Street. Meanwhile, investors looked ahead to the release of China's August inflation data. Indian markets ended a volatile session mildly lower on Wednesday as gains in financial stocks were offset by losses in IT and automobile shares. Today, markets are likely to make flat-to-negative start following a weak trend in global peers. There will be some cautiousness with a report by India Ratings and Research stating that India Inc resorted to salary cuts to protect their profits in the June quarter, as revenues came under pressure due to the second pandemic wave that affected nearly the entire country. It added the weak wage growth will prove to be a drag on the overall economic recovery in the medium term as it will affect household consumption. Traders may take note of report that India's states are restricting religious festivals that start this week and attract huge crowds, fearing that a new Covid-19 wave could be imminent. The Supreme Court has rejected a petition seeking door-to-door Covid vaccination in the country, saying such a campaign was not feasible. Besides, Mumbai has recorded 530 new cases of Covid-19: the highest since mid-July. However, some respite may came later in the day as S&P Global Ratings said India is expected to post strong economic growth in the coming quarters, even as inflation, led by food prices, is likely to remain elevated. It said the economy is expected to clock 9.5 per cent growth in the current fiscal year, followed by 7 per cent expansion in the next year. Some support may come as the Cabinet Committee on Economic Affairs (CCEA) approved an increase in the Minimum Support Prices (MSP) for all the mandated Rabi crops for the Rabi Marketing Season (RMS) 2022-23 with an aim to realign the MSPs in favour of oilseeds, pulses and coarse cereals. Meanwhile, a private report stated that India Inc's business sentiments are drawing closer to pre-pandemic levels, hinting at a more robust performance in the next quarter. Auto stocks will be in focus as India Ratings Research (Ind-Ra) said in its latest auto outlook stated that auto volumes are expected to rise 12-16 per cent year-on-year this fiscal, as against the earlier estimate of 16-20 per cent. It said the growth estimate has been revised downward on account of a revision in the growth forecasts for two-wheelers (2Ws) and passenger vehicles (PVs). There will be some buzz in the textile industry stocks as the Union Cabinet approved the production-linked incentive (PLI) scheme for textiles for a budgetary outlay of Rs 10,683 crore to boost domestic manufacturing of man-made fibres (MMF), garments, and technical textiles.

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

Nifty Top volumes

• Wipro has entered into partnership with Securonix, a Gartner Magic Quadrant Leader SIEM vendor, and provider of the Securonix Security Operations & Analytics Platform. 
• HDFC Bank has signed a MoU with the National Small Industries Corporation for providing credit support to the micro, small and medium enterprise sector. 
• Dr. Reddy's Laboratories has initiated supply of the first dose component of Russian COVID-19 vaccine Sputnik V to partner hospitals all over the country. 
• Infosys and The Economist Group have designed new strategic partnership to enable and accelerate sustainability solutions and drive world-changing impact through a new business-to-business model.