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In volatile trading session, Indian equity benchmarks erased initial losses and ended in green terrain on Wednesday, amid continuous foreign fund inflows and a largely positive trend in global markets. Markets made a cautious start and traded lower for most part of the day, as traders got anxious with data showing that India’s trade deficit widened to a record $31 billion in July with a sequential decline in exports and somewhat flat imports owing to growing recessionary trends in developed economies and elevated commodity prices. The data released by the commerce ministry showed merchandise exports declined to a five-month low at $35.2 billion in July while imports eased sequentially to $66 billion. Sentiments remained down-beat with a private survey showed growth in India's dominant services industry slowed sharply in July, squeezed by high inflationary pressures and weaker demand, leading to a further fall in business expectations. The S&P Global India Services Purchasing Managers' Index sank to 55.5 in July from 59.2 in June, its lowest since March.

Some concerns also came after minister of state for finance Bhagwat K Karad said that the government is not planning to introduce any bill to make amendments to facilitate the privatisation of public sector banks in the ongoing monsoon session. However, markets trimmed all of their losses to end higher as exchange data showed foreign institutional investors (FIIs) remained net buyers in the capital markets as they bought shares worth Rs 825.18 crore on Tuesday. Some support also came with Centre for Monitoring Indian Economy (CMIE) data showing that the country's unemployment rate fell from 7.80 per cent in June to 6.80 per cent in July, the lowest level in the last six months, amid rising agriculture activities during monsoon. Adding to the optimism, Finance Minister Nirmala Sitharaman has asserted that there is no collapse of the unit and it is actually finding its natural course. She said the RBI is continuously monitoring the local currency and intervening only if there is volatility.

On the global front, European markets were trading higher despite concerns about escalating conflict between China and the United States over U.S. House Speaker Nancy Pelosi's trip to Taiwan. Investors shrugged off the latest survey results suggesting that Eurozone business activity contracted in July amid a downturn in the manufacturing sector and slowing in the service economy. Asian markets settled mostly higher on Wednesday as a private-sector survey showed China's services activity grew at the fastest rate in 15 months in July as easing COVID curbs boosted consumer confidence, but foreign demand fell and companies cut staff for the seventh month in a row. The Caixin services purchasing managers' index (PM) rose to 55.5 in July, the fastest growth since April 2021, rising further from the robust reading of 54.5 in June.

Back home, there were some reaction in insurance industry stocks as the Insurance Regulatory and Development Authority of India (Irdai) proposed a single limit for the expenses of general and health insurance firms. This move is expected to bring relief to non-life insurers, especially private players. FMCG companies stocks were in limelight with a private report that consumption of fast-moving consumer goods (FMCG) like packaged foods, beverages, and toiletries revived in the April-June quarter in urban markets but was negative in rural India as people opted for smaller packs. Investors awaited more of corporate earnings from India Inc.

Finally, the BSE Sensex rose 214.17 points or 0.37% to 58,350.53 and the CNX Nifty was up by 42.70 points or 0.25% to 17,388.15. 

The BSE Sensex touched high and low of 58,415.63 and 57,788.78, respectively. There were 18 stocks advancing against 12 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index fell 0.60%, while Small cap index was down by 0.28%.

The few gaining sectoral indices on the BSE were IT up by 1.28% and TECK up by 1.13%, while Telecom down by 1.26%, Capital Goods down by 0.82%, Auto down by 0.78%, Realty down by 0.73%, Healthcare down by 0.65% were the losing indices on BSE.

The top gainers on the Sensex were Tech Mahindra up by 1.97%, TCS up by 1.51%, Infosys up by 1.44%, Titan Company up by 1.27% and Asian Paints up by 1.22%. On the flip side, Maruti Suzuki down by 2.29%, Sun Pharma down by 2.17%, Kotak Mahindra Bank down by 1.75%, Indusind Bank down by 0.90% and Bajaj Finance down by 0.65% were the top losers.

Meanwhile, the Centre for Monitoring Indian Economy (CMIE) in its latest data has showed that the country's unemployment rate fell from 7.80 per cent in June to 6.80 per cent in July, the lowest level in the last six months, amid rising agriculture activities during monsoon. Rural unemployment declined 6.14 per cent to 272.1 million last month from 265.2 million or 8.03 per cent in June. On the other hand, urban unemployment jumped to 8.21 per cent in July from 7.80 per cent in June as the number of jobs fell both in industry as well as services. The employment in urban India fell by 0.6 million, from 125.7 million to 125.1 million.

CMIE Managing Director and CEO Mahesh Vyas said the month-on-month recovery in employment was partial as the fall in June was 13 million compared to the growth of only 6.3 million jobs in July. The recovery was mainly in rural areas and in particular in agriculture as the southwest monsoon progressed and kharif sowing activities picked up pace. Vyas added the agriculture sector in the rural area absorbed an additional 9.4 million workforce in July, while it shed 8 million in June. This lower-than-expected absorption of labour into agriculture in July reflects the patchy progress of the southwest monsoon and the correspondingly poor kharif sowing this year.

He said that the industrial sector lost 0.2 million jobs in July after having lost 4.3 million during June, while the services sector lost 2.8 million jobs in July after having lost 0.8 million in June. He added that the industrial and services sectors have been losing jobs for two months. In May, the employment in the industrial sector had shot up to 108 million, but since then it has declined to 104 million in June and July. He noted that the recovery in industrial jobs was essentially in the construction industry and not in manufacturing, which are of better quality. Over 8 million non-farm jobs were lost during June and July, equally both in the industry and services sectors.

The CNX Nifty traded in a range of 17,407.50 and 17,225.85. There were 25 stocks advancing against 25 stocks declining on the index.

The top gainers on Nifty were Tech Mahindra up by 2.22%, Infosys up by 1.70%, Titan Company up by 1.42%, TCS up by 1.37% and Asian Paints up by 1.36%. On the flip side, Sun Pharma down by 2.22%, Tata Motors down by 1.93%, Kotak Mahindra Bank down by 1.84%, Maruti Suzuki down by 1.74% and Coal India down by 1.51% were the top losers.

European markets were trading higher; UK’s FTSE 100 increased 5.03 points or 0.07% to 7,414.14, France’s CAC increased 16.76 points or 0.26% to 6,426.56 and Germany’s DAX increased 41.23 points or 0.31% to 13,490.43.

Asian markets settled mostly higher on Wednesday despite US shares' overnight retreat on hawkish comments from Fed leaders. Japanese shares gained as investors scooped up shares that reported robust earnings, despite a measure of Japan's services sector activity hit the lowest level since March in July. However, Chinese shares declined by worsening relationship between the United States and China and after US House Speaker Nancy Pelosi's visit to Taiwan. Data showed that China's services sector grew at a faster clip in July from the previous month as a result of easing Covid curbs.

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