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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.

On the global front, Asian markets ended mostly higher on Wednesday as optimism for strong earnings growth and expectations of continued support from central banks offset renewed concerns about the rapid spread of the delta variant of the coronavirus. European markets were trading higher as final data from IHS Markit showed the euro area private sector grew the most in more than 15 years in July, underpinned by steep manufacturing output growth and an accelerated expansion of services activity. The composite output index rose to 60.2 in July from 59.5 in the previous month. But the reading was below the flash score of 60.6. Back home, on the sectoral front, NBFCs stocks were in focus as rating agency Icra said the asset quality of non-banking finance companies will see elevated stress levels in the near term due to the second wave of the pandemic, but the stress will subside subsequently as collection efficiencies improve and restructuring picks up. Auto component industry’s stocks were in action as industry body ACMA said the auto component industry is cautiously optimistic about growth prospects in the current fiscal amid various challenges like an increase in raw material cost and logistics continuing to hinder a smooth recovery.

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 BSE Sensex touched high and low of 54,465.91 and 54,034.31, respectively and there were 14 stocks advancing against 16 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index fell 1.05%, while Small cap index was down by 1.06%.

The top gaining sectoral indices on the BSE were Bankex up by 2.60%, Energy up by 0.43%, PSU up by 0.05%, Power up by 0.01%, while Telecom down by 2.25%, Realty down by 1.69%, Consumer Durables down by 1.39%, Industrials down by 1.09%, Basic Materials down by 0.96% were the losing indices on BSE.

The top gainers on the Sensex were HDFC up by 4.77%, Kotak Mahindra Bank up by 3.74%, ICICI Bank up by 3.58%, SBI up by 2.37% and HDFC Bank up by 2.12%. On the flip side, Titan Company down by 2.14%, Nestle down by 1.39%, Ultratech Cement down by 1.19%, Sun Pharma down by 1.16% and Maruti Suzuki down by 1.09% were the top losers.

Meanwhile, government has said that it 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 2020-21.

Minister of State for Finance Pankaj Chaudhary said the government's amendment of the FRBM Act will target a path of fiscal consolidation aimed towards reaching a level of fiscal deficit below 4.5 per cent of GDP by 2025-26.

The government expects fiscal deficit to come down to 6.8 per cent in the current fiscal from 9.3 per cent estimated for 2020-21. He added amendment to the FRBM debt targets will be in consonance with the broad fiscal deficit path.

The CNX Nifty traded in a range of 16,290.20 and 16,176.15 and there were 19 stocks advancing against 31 stocks declining on the index.        

The top gainers on Nifty were HDFC up by 4.59%, Kotak Mahindra Bank up by 3.89%, ICICI Bank up by 3.14%, SBI up by 2.16% and HDFC Bank up by 2.15%. On the flip side, Grasim Industries down by 2.47%, Titan Company down by 2.13%, Tata Motors down by 1.84%, Adani Ports &SEZ down by 1.64% and Hindalco down by 1.58% were the top losers.

European markets were trading higher; UK’s FTSE 100 increased 28.54 points or 0.4% to 7,134.26, France’s CAC increased 35.36 points or 0.53% to 6,759.17 and Germany’s DAX increased 125.55 points or 0.81% to 15,680.63.

Asian markets ended mostly higher on Wednesday tracking gains on Wall Street overnight, despite renewed concerns about the rapid spread of the delta variant of the coronavirus globally. Chinese shares rose after the latest survey from Caixin showed the services sector in the country expanded at a faster rate in July. Hong Kong shares jumped even as the private sector in the country expanded at a slower pace in July. However, Japanese shares settled lower after the latest survey from Jibun Bank showed the services sector in the country contracted at a faster rate in July.

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