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Indian markets ended with gains on Wednesday, extending their previous day rally amid lower level of inflation on domestic front and better-than-expected inflation readings from the US. Today, the markets are likely to open in red on weak global cues. Traders will be concerned as India Ratings said falling exports and high crude prices are set to push up current account deficit (CAD) in the second quarter to a 37-quarter high of 4.4 per cent of GDP at USD 36 billion as against USD 9.7 billion or 1.3 per cent in the year-ago period. However, some respite may come as Finance minister Nirmala Sitharaman exuded confidence that inflation would further decline and the government is on track to meet its budgetary target for deficit and said that there is no fear of stagflation in India. Some support may come as foreign institutional investors (FIIs) net bought shares worth Rs 372.16 crore in the Indian share market on 14 December, according to the provisional data available on the NSE. Meanwhile, the Parliament has passed the Energy Conservation (Amendment) Bill, 2022 that aims to mandate the use of green energy and enables the government to set up a carbon trading scheme. The Bill also allows the government to specify the minimum amount of non-fossil sources to be used by designated energy consumers.  Edible oil industry stocks will be in focus as industry body SEA said India’s edible oil imports rose 34 per cent in November to 15.29 lakh tonne on sharp jump in import of crude palm and refined palm oils. The Solvent Extractors’ Association of India (SEA) released the data of imports of total vegetable oils comprising edible oil and non-edible oil for November, the first month of 2022-23 oil marketing year. There will be some reaction in textile industry stocks as Icra in a report said even as macro headwinds impact performance of textile players across segments in the second quarter of 2022-23, the companies are expected to witness a healthy turnover in this financial year. Icra said it expects textile companies to report healthy growth in turnover in FY23 while the margins are expected to moderate amidst cost pressures. Besides, Commerce, industry and textiles minister Piyush Goyal has said India will aim to achieve $100 billion exports for textiles by 2030 as there are huge opportunities in the sector.

The US markets ended in red on Wednesday after US Federal Reserve announced a 50 bps interest rate hike which was on expected lines. Asian markets are trading lower on Thursday following overnight weakness on Wall Street.

Back home, Indian equity benchmarks pared some initial gains but managed to end higher on Wednesday, led by gains in Metal and Realty stocks. Benchmarks made optimistic start and stayed in green for whole day as traders took some support with the government stating that an amount of Rs 60.46 crore has been received in tax from entities for transactions in virtual digital assets (VDAs), including cryptocurrencies, since the introduction of TDS provisions in July. Buying further crept in as industry body PHDCCI said India can scale up its merchandise exports to G20 nations to $500 billion by 2030 from the current $212 billion and significantly reduce trade deficit. Traders also took a note of report that India and the United Kingdom (UK) have decided to iron out the differences while keeping both nations’ sensitivities in mind, and agreed to conclude the negotiations towards a free trade agreement (FTA) at the earliest. Key gauges extended gains in afternoon deals, as India’s inflation based on wholesale price index (WPI) eased further to 5.85% in the month of November 2022 as against 8.39% recorded in October 2022, primarily contributed by fall in prices of food articles, basic metals, textiles, chemicals & chemical products and paper & paper products as compared to the corresponding month of the previous year. The wholesale inflation was 10.70% in September 2022. Steady foreign flows aided the sentiments in the domestic markets. Foreign institutional investors (FIIs) net bought shares worth Rs 619.92 crore on December 13, according to the provisional data available on the NSE. However, indices pared some of the gains towards the end as traders got anxious with the Asian Development Bank’s report stating that developing Asia's economic expansion next year is expected to be slower than previously projected as a global slowdown and the prolonged war in Ukraine weigh on the region. Finally, the BSE Sensex rose 144.61 points or 0.23% to 62,677.91 and the CNX Nifty was up by 52.30 points or 0.28% to 18,660.30.

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