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Indian markets ended lower on Wednesday as investors sold metal, financial, and Adani group shares. Today, start of the monthly F&O expiry is likely to be negative amid weak global cues as clouds hover on US debt ceiling talks ahead of the June 1 deadline. Traders will be concerned as the RBI data showed that gross foreign direct investment (FDI) flows, for the first time in a decade, declined on an annual basis in 2022-23 to $71 billion mainly due to a slowdown in the global economy. However, some respite may come later in the day as Reserve Bank Governor Shaktikanta Das said the growth for 2022-23 is expected to be more than the advance estimate of 7 per cent on the back of economic momentum maintained in the third and fourth quarters of the last fiscal. Traders may take note of Commerce and industry Minister Piyush Goyal’s statement that India has a strong foreign exchange reserve and the country is in a comfortable position to meet all the requirements even in any worst-case scenario in the next five-six years. According to the Reserve Bank of India, India’s forex kitty jumped $3.553 billion to $599.529 billion for the week ended May 12. Besides, the commerce ministry is trying to address issues pertaining to the promotion of exports through ecommerce medium. Director General of Foreign Trade (DGFT) Santosh Kumar Sarangi also said that while the $2 trillion export target by 2030 is ambitious as it entails an annual growth of 14.5 per cent (CAGR), it is not impossible. Meanwhile, exports of broken rice will be allowed on the basis of permission given by the government for shipments to other countries for meeting their food security needs. In general, the export of broken rice is banned. IT stocks will be in focus as S&P Global Ratings believe that Indian IT firms could see revenue decelerate by 5 per cent through FY25. Macroeconomic concerns, along with a cautious approach towards discretionary information technology (IT) spending, will likely impact the revenue. Moreover, investors await more of financial results from India Inc for domestic cues, with Vodafone Idea, Indian Energy Exchange, SAIL, Zee Entertainment, and Page Industries due to post their earnings later in the day.

The US markets ended lower on Wednesday after Fitch Ratings placed the United States’ AAA rating on a negative watch list, stating that the ongoing debt ceiling negotiations have raised the risks that the government could miss payments on some of its obligations. Asian markets are trading mostly in red on Thursday tracking overnight losses on Wall Street.

Back home, in a volatile session, Indian equity benchmarks ended lower on Wednesday dragged by Banking, Metal and Industrials stocks. Markets made pessimistic start as traders were cautious with a private report that foreign direct investment (FDI) inflows into the country fell 16% to $71 billion (on a gross basis) during 2022-23 on the back of a weak global economic situation, marking the first decline in a decade. However, key gauges erased losses and traded higher in morning deals, as traders took support with the SBI's research report 'Ecowrap' stating that the withdrawal of Rs 2000 currency note is likely to be a non-event but it will have a favourable bearing on liquidity, bank deposits and interest rates. It expects that almost the entire amount of Rs 3.6 lakh crore in the form of Rs 2000 will come back to the banking system. Some support also came with the provisional data available on the NSE showed Foreign institutional investors (FII) bought shares worth net Rs 182.51 crore on May 23. However, buying proved short-lived as markets once again entered into red terrain in afternoon deals, amid weakness in global markets as the overhang of the US debt ceiling negotiation influenced sentiments. Traders overlooked Commerce and industry Minister Piyush Goyal’s statement that India has a strong foreign exchange reserve and the country is in a comfortable position to meet all the requirements even in any worst-case scenario in the next five-six years. Traders took a note of Moody’s Investors Service in its latest research report said that India's Gross Domestic Product (GDP) has crossed $3.5 trillion in 2022 and will be the fastest-growing G-20 economy over the next few years, but reform and policy barriers could hamper investment. Finally, the BSE Sensex fell 208.01 points or 0.34% to 61,773.78 and the CNX Nifty was down by 62.60 points or 0.34% to 18,285.40.

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