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Indian equity benchmarks wiped out entire intraday gains and ended marginally lower on Wednesday, as investors booked profits at higher levels. The benchmarks traded on a positive note for most part of the day, as traders took encouragement with Chief Economic Adviser (CEA) K V Subramanian’s statement that a number of reforms undertaken by the government in the last one year especially focused on removing supply side frictions are expected to spur investment, including foreign investment. Sentiments remained positive as Finance Minister Nirmala Sitharaman exhorted ministries to aim to achieve more than their capital expenditure (capex) targets for this fiscal, highlighting that enhanced spending will play a critical role in revitalising the economy post-pandemic. Some support also came as the Union Cabinet may soon clear a proposal to provide government guarantee to security receipts issued by the National Asset Reconstruction Company (NARCL) as part of resolution of bad loans. Indian Banks' Association (IBA), entrusted with the task of setting up a bad bank, has pegged the government guarantee to be around Rs 31,000 crore.

However, key gauges gave up gains during closing hours, as traders got anxious with the Reserve Bank of India’s (RBI) data showing that credit growth to the industrial sector remained in the negative territory during 2020-21, mainly due to the COVID-19 pandemic and resultant lockdowns. It said personal loans continued to grow at robust pace and recorded 13.5 per cent growth (Y-o-Y) in March 2021; industrial loan growth, on the other hand, remained negative during all quarters of 2020-21. Some cautiousness also came as a day after witnessing a sharp decline in the number of daily Covid-19 cases, India recorded 45,699 infections and 816 fatalities in the last 24 hours. The country's total coronavirus caseload stands at 30,316,000, while the death toll has jumped to 397,668. Traders took a note of minister for MSME and Road Transport and Highways Nitin Gadkari’s statement that the Manufacturing sector needs to be strengthened for employment generation and eradicate poverty.

On the global front, Asian markets settled mostly higher on Wednesday after rising consumer confidence in economic recovery boosted the Nasdaq index to its highest-ever closing level. European markets were trading lower as investors weigh possible threats to the nascent economic recovery from the spread of the delta variants of coronavirus and the potential impact of quickening of rollback of monetary stimulus in the U.S. as well as Europe. Back home, on the sectoral front, pharma stocks were in focus as sector majors including Cipla, Dr Reddy’s Laboratories, Sun Pharmaceutical Industries and Torrent Pharmaceuticals will collaborate for the clinical trial of the investigational oral anti-viral drug Molnupiravir for the treatment of mild COVID-19 in an outpatient setting in India. Banking stocks were in limelight with a private report that helped by faster pace of credit growth, the share of Indian private banks in total credit rose to 36.5 per cent in the financial year ended March 2021 (FY21) from 35.4 per cent a year ago.

Finally, the BSE Sensex fell 66.95 points or 0.13% to 52,482.71, while the CNX Nifty was down by 26.95 points or 0.17% to 15,721.50.  

The BSE Sensex touched high and low of 52,875.92 and 52,448.64, respectively and there were 12 stocks advancing against 18 stocks declining on the index.  

The broader indices ended mixed; the BSE Mid cap index fell 0.03%, while Small cap index was up by 0.56%.

The top gaining sectoral indices on the BSE were IT up by 0.87%, Energy up by 0.66%, TECK up by 0.64%, Industrials up by 0.53% and Capital Goods up by 0.31%, while Utilities down by 1.20%, Power down by 0.91%, Bankex down by 0.61%, Oil & Gas down by 0.50%, Realty down by 0.43% were the top losing indices on BSE.

The top gainers on the Sensex were Infosys up by 1.19%, Reliance Industries up by 1.14%, Nestle up by 0.85%, Maruti Suzuki up by 0.74% and Tech Mahindra up by 0.60%. On the flip side, Power Grid Corporation down by 1.51%, Bajaj Finserv down by 1.49%, ICICI Bank down by 1.46%, HDFC down by 1.04% and NTPC down by 1.02% were the top losers.

Meanwhile, Chief Economic Adviser (CEA) K V Subramanian has said that a number of reforms undertaken by the government in the last one year especially focused on removing supply side frictions are expected to spur investment, including foreign investment. He also said the fact that India recorded the highest growth amidst pandemic when FDI has shrunk by about 50 percent for the emerging economies, indicates that foreign firms put their money where their mouth is.

Observing that FDI in merger & acquisition (M&A) versus greenfield that distinction is pertinent, Subramanian said, ‘the fact that the same M&A did not happen as much in other countries but happened in India actually thereby recording significant growth...is indicative of the India story.’ Stressing that India is the only country among large economies that has done a slew of reforms in the last one-and-a-half years, he said these are especially focused on removing a lot of supply side frictions paving way for investment to flow in.

CEA also stated that ‘the labour reform, the agricultural reform, the change in definition of MSME to avoid the phenomenon of dwarfism and most importantly, the enterprise policy focused on the private sector...this is where path of future FDI must be understood in the context of the enterprise policy focused on the private sector.’ 

The CNX Nifty traded in a range of 15,839.10 and 15,708.75 and there were 17 stocks advancing against 33 stocks declining on the index. 

The top gainers on Nifty were Coal India up by 1.28%, Reliance Industries up by 1.16%, Divi's Lab up by 1.11%, Infosys up by 1.08% and Tech Mahindra up by 0.79%. On the flip side, Shree Cement down by 1.90%, Bajaj Finserv down by 1.82%, Power Grid Corp down by 1.50%, UPL down by 1.42% and ICICI Bank down by 1.35% were the top losers.

European markets were trading lower; UK’s FTSE 100 decreased 37.14 points or 0.52% to 7,050.41, France’s CAC fell 55.84 points or 0.85% to 6,511.59 and Germany’s DAX was down by 151.49 points or 0.97% to 15,539.10.

Asian markets settled mostly higher on Wednesday even as the market remained a bit cautious amid worries about highly contagious Delta variant of the coronavirus that are quickly spreading in Asia. Meanwhile, investors are awaited the US monthly payroll data due later in the week for further clues on the US Federal Reserve’s monetary policy moving forward. Chinese shares ended higher on surge in major tech indexes that posted biggest quarterly gains in a year on policy support from Beijing and strong earnings expectations, but gains were capped after data showed that factory and service sector activity rose the least in four months amidst outbreaks of corona-virus in select regions. However, Japanese shares dipped on concerns over the outlook of the economy.

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