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Indian markets extended gains for the second day on Wednesday on buying seen across sectors barring metals. Today, the markets are likely to extend their previous session’s gains with gap-up opening amid firm global cues. The key event of the day, which could lend direction to the markets is the state election results of Uttar Pradesh, Punjab, Goa, Mizoram and Uttarakhand. Investors may react positively to the results if they come in line with the exit polls that projected the ruling BJP to win in the key state of UP. Traders may take note of report that former RBI governor Raghuram Rajan has said India needs to recalibrate its response to the price situation following disruptions in global supply chains on account of Russia-Ukraine war, as losing the battle against inflation neither serves the government nor the central bank. Meanwhile, Union Finance Minister Nirmala Sitharaman has said the GST compensation cess period has already been extended till March 2026 to enable the Centre to repay loans taken to compensate all states for the year 2020. However, traders may be concerned with India Ratings and Research’s (Ind-Ra) statement that the country's current account deficit (CAD) is likely to widen to a 13-quarter high of $23.6 billion or 2.8 per cent of GDP in October-December 2021-22 due to higher commodity prices following the Russia-Ukraine conflict. There may be some cautiousness as S&P Global Ratings said rising oil prices may dampen economic growth and cause a sizeable current account deficit (CAD) in large energy-importing countries like India. The ratings agency retained India’s economic growth at 7.8 per cent for FY23. There will be some reaction in defence industry stocks as Niti Aayog member V K Saraswat said India's defence sector will not face any problems because of the western sanctions on Russia as Moscow has an inherent military strength and is self-sufficient in its production capabilities.

The US markets ended higher on Wednesday after Ukrainian President Volodymyr Zelenskiy said the country is ready to hold a dialogue with Russia on security guarantees and the future of Donetsk, Lugansk and Crimea. Asian markets are trading mostly in green on Thursday following overnight gains on Wall Street.

Back home, Indian equity benchmarks carried forward yesterday’s gains and settled over 2 percent higher on Wednesday, tracking recovery in global indices. After the flat start, the benchmarks inched gradually higher as the day progressed and settled closer to the day’s high. Sentiments remained positive as the Reserve Bank of India (RBI) has extended the interest equalisation scheme for pre and post shipment rupee credit for Ministry of Small and Medium Enterprises (MSME) exporters till March 2024 with the objective of boosting outbound shipments.  Traders took support with report that the Agriculture Ministry is ready with a new central scheme to promote natural farming in the country with an estimated outlay of Rs 2,500 crore. The proposed new scheme on natural farming will soon be placed before the Cabinet for approval. Frontline indices continued to trade higher in late afternoon deals, taking support from Finance Minister Nirmala Sitharaman’s statement that the Union budget for 2022-23 was about the philosophy of Atmanirbhar Bharat (self-reliant Bharat) as customs duties were increased on those imported products which are also manufactured in India so that people buy the Indian equivalent. However, duties have not been increased on the products produced within the country. Adding to the optimism, Prime Minister Shri Narendra Modi has approved the setting up National Land Monetization Corporation (NLMC) as a wholly owned Government of India company. With monetization of non-core assets, Government would be able to generate substantial revenues by monetizing unused and under-used assets. Traders overlooked rating agency Icra’s report in which it has warned of serious downside risks to the economy in next fiscal (FY23) with runaway current account deficit, steep fall in the rupee and a hardening yields on government bonds, as a result of the Russian-Ukraine crisis and the resultant spike in crude and other commodity prices. Finally, the BSE Sensex rose 1223.24 points or 2.29% to 54,647.33 and the CNX Nifty was up by 331.90 points or 2.07% to 16,345.35. 

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