Indian equity benchmarks extended their losses for the second consecutive session on Wednesday with Sensex declining by 371 points while the Nifty closing below the 18,200-level, led by mixed global markets amid worries over the debt ceiling crisis in the US. After making a cautious start, markets lingered in negative territory throughout the day, as traders were anxious with the India Meteorological Department (IMD) stating that a slight delay is expected in the onset of the southwest monsoon over Kerala and it is likely to arrive by June 4. Some pessimism also came amid the UN's latest report showing that prospects for a robust global economic recovery remain dim as the lingering effects of the COVID-19 pandemic carry on. The report found that risks of a prolonged period of low growth stand, amid stubborn inflation, rising interest rates, and heightened uncertainties, in addition to the ever- worsening impact of climate change. Markets extended fall in afternoon deals, as sentiments remain dampened with a private report stating that a cash crunch is persisting in India, pushing short-term borrowing costs above a key policy interest rate and posing risks to an economy that needs cheaper funding to sustain its recovery. Traders took a note of Indian Banks' Association (IBA) chief executive Sunil Mehta's statement that banks have requested the Reserve Bank of India (RBI) for one more year's time to implement the system of Expected Credit Loss (ECL) for provisioning of loans. At present, banks set aside money after an asset turns bad, and once the new system is put in place, it is widely expected to have an one-time impact on banks' profits. However, in the final hours of the session, the indices cut some losses, as some support came with exchange data showing that Foreign Institutional Investors (FIIs) were buyers on Tuesday as they bought equities worth Rs 1,406.86 crore. Finally, the BSE Sensex fell 371.83 points or 0.60% to 61,560.64 and the CNX Nifty was down by 104.75 points or 0.57% to 18,181.75.

The US markets ended higher with notable gains of over a percent on Wednesday reflected optimism lawmakers will eventually reach an agreement on raising the U.S. debt ceiling following Tuesday's meeting between President Joe Biden and top congressional leaders. A statement from the White House described the meeting as productive and said Biden is optimistic that there is a path to a responsible, bipartisan budget agreement. Biden directed staff to continue to meet daily on outstanding issues, with the president cutting short an upcoming overseas trip to ensure Congress takes action by the June 1st deadline to avert default. Also, regional banks helped lead the rebound on Wall Street, with shares of Western Alliance (WAL) spiking by 10.2 percent after the company said deposit growth for the current quarter exceeded $2 billion as of May 12. On the economic data front, the Commerce Department released a report unexpectedly showing a significant rebound in new residential construction in the month of April. The report said housing starts jumped by 2.2 percent to an annual rate of 1.401 million in April after plunging by 4.5 percent to a revised rate of 1.371 million in March. Street had expected housing starts to drop to an annual rate of 1.405 million from the 1.420 million originally reported for the previous month. Meanwhile, the Commerce Department said building permits slumped by 1.5 percent to an annual rate of 1.416 million in April after tumbling by 3.0 percent to a revised rate of 1.437 million in March. Building permits, an indicator of future housing demand, were expected to climb to a rate of 1.430 million from the 1.413 million originally reported for the previous month.

Crude oil futures settled significantly higher on Wednesday with gains of over 2% on the back of prospects of higher demand and amid optimism over U.S. debt ceiling negotiations. The International Energy Agency (IEA) said in its report expects demand would outpace supply by 2 million barrels per day in the second half of the year, with China contributing up to 60% of oil demand growth. Meanwhile, data released by the Energy Information Administration (EIA) showed crude inventories in the U.S. rose by 5 million barrels in the week ended March 12. The EIA data showed gasoline stocks dropped by 1.38 million barrels last week, while distillate stockpiles increased by 0.080 million barrels. Benchmark crude oil futures for June delivery rose $1.97 or about 2.8 percent to settle at $72.83 a barrel on the New York Mercantile Exchange. Brent crude for July delivery gained $2.05 or about 2.7 percent to settle at $76.97 a barrel on London's Intercontinental Exchange.

Indian rupee weakened against the US dollar on Wednesday, weighed down by the strength of the American currency in the overseas market and a negative trend in domestic equities. Traders were cautious amid the UN's latest report showing that prospects for a robust global economic recovery remain dim as the lingering effects of the COVID-19 pandemic carry on. The report found that risks of a prolonged period of low growth stand, amid stubborn inflation, rising interest rates, and heightened uncertainties, in addition to the ever- worsening impact of climate change. On the global front, the pound slipped against a strengthening dollar on Wednesday and maintained its losses after Bank of England Governor Andrew Bailey reiterated he expected price pressures to ease, as soon as April. Finally, the rupee ended at 82.38 (Provisional), weaker by 13 paise from its previous close of 82.25 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 7934.31 crore against gross selling of Rs 6218.41 crore, while in the debt segment, the gross purchase was of Rs 1727.15 crore against gross selling of Rs 564.81 crore. Besides, in the hybrid segment, the gross buying was of Rs 9.63 crore against gross selling of Rs 23.49 crore.

The US markets close higher on Wednesday after US President Joe Biden and Republican Party's House of Representatives speaker Kevin McCarthy vowed to avoid an economically catastrophic default. Asian markets are trading mostly in green on Thursday following overnight gains on Wall Street. Indian markets extended losses for the second straight day on Wednesday as sentiment turned cautious with fears of US debt default mounting as the deadline to raise the government's borrowing limit draws near. Today, start of the session is likely to be positive tracking firm cues from global markets as leaders in the US assured there won't be a debt default. Some support will come with a private report that the country's current account deficit may narrow to 1.4 per cent of GDP or $50 billion in 2023 as compared to 2.4 per cent in the previous year as net remittances flows are expected to be $104 billion. However, there may be some cautiousness with a private report that the value of foreign portfolio investment (FPI) in Indian equities was at $542 billion in the March quarter of 2023, a decline of 11 per cent from the preceding year, largely due to the exodus of foreign money from the domestic market. In comparison, the value of FPI in Indian equities was $612 billion in the January-March quarter of 2022. There will be some buzz in the fertilizer and agriculture related stocks with report that the Union Cabinet approved a Rs 1.08 lakh crore package for fertiliser subsidy for the April-September kharif season. Of the Rs 1.08 lakh crore subsidy, Rs 70,000 crore is for urea and Rs 38,000 crore for Di-ammonium Phosphate, or DAP. The subsidy is likely to benefit about 12 crore farmers. The Kharif season is crucial for farmers as they rely heavily on fertilisers during this time for crop cultivation and yield enhancement. IT hardware stocks will be in focus as the Union Cabinet approved the modified production-linked incentive (PLI) scheme for information technology (IT) hardware to boost local manufacturing of products like tablets and laptops, and more than doubled its budgetary outlay to Rs 17,000 crore from the previous provision of Rs 7,325 crore. There will be some reaction in hotel industry stocks with private report that Indian hotels in terms of room rate and occupancy have not only reached but surpassed pre-Covid levels. Investors also await quarterly results of companies including State Bank of India, ITC, GAIL (India) and Interglobe Aviation, to be out with results later in the day.

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

Nifty Top volumes

• Bajaj Finance has raised Rs 2,075 crore through allotment of 20,750 Secured Redeemable NCDs on Private Placement Basis. 
• APSEZ has set a new benchmark by handling the highest-ever rail cargo of 120.51 MMT in the financial year 2022-23, surpassing the previous best of 98.61 MMT. 
• Larsen & Toubro's construction arm -- L&T construction has secured EPC orders in India for its Buildings & Factories Business. 
• Maruti Suzuki has clocked the 30 lakh sales milestone for WagonR.