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Indian markets witnessed heavy selling pressure and ended off lows on Wednesday as US Treasury yields hit fresh 16-year highs, but buying in IT and FMCG stocks limit the losses. Today, start of the session is likely to be in green as global shares recover from a spate of losses coupled with sharp fall in crude oil prices. Investors will be eyeing the Services PMI data to be out later in the day for more directional cues. Traders will be taking encouragement as Finance Secretary T V Somanathan said India's retail inflation is likely to ease by December as seasonal factors become more favourable. India's retail inflation remained above the upper end of the central bank's 2%-6% tolerance band for a second consecutive month in August, though it eased from a 15-month high of 7.44% in July. Some support will come with a private report that the much-awaited India-UK Free Trade Agreement (FTA) is set to be signed by both countries by month-end, with all outstanding issues having been resolved. Traders may take note of report that the Centre has increased the subsidy to Rs 300 per cylinder from Rs 200, paid to poor women who got cooking gas connections under the Pradhan Mantri Ujjwala Yojana. However, foreign fund outflows likely to dent sentiments. Provisional data from the National Stock Exchange (NSE) showed that foreign institutional investors (FII) offloaded shares worth Rs 4,424.02 crore on October 4. Some cautiousness may come as Petroleum and Natural Gas Minister Hardeep Singh Puri warned of ‘organised chaos’ if crude oil starts selling at over $100 per barrel. Defence stocks will be in limelight as the government released the fifth Positive Indigenisation List (PIL) of 98 items which will be procured by the three armed services from indigenous suppliers in a staggered manner. There will be some buzz in auto stocks with a private report that the Indian automobile sector has the potential to become an export-led $1 trillion industry by 2035. Infrastructure related stocks will be in focus as Road Transport and Highways secretary Anurag Jain said around 85 per cent of road projects are likely to be completed by the end of this fiscal, as the steps taken by the government to ensure faster clearances like monitoring and quicker resolution of issues have started showing results.

The US markets ended higher on Wednesday aided by a pullback in treasury yields from multi-year highs after a survey showed 89,000 private jobs were added in Sept, way below the 160,000 estimate. Asian markets are trading in green on Thursday tracking overnight gains on Wall Street.

Back home, extending their previous day's fall, Indian equity benchmarks ended lower by around half a percent on Wednesday due to weak trends in the US and Asian markets.  After the gap-down start, markets further drifted lower in the first half as provisional data from the National Stock Exchange (NSE) showed that foreign institutional investors (FII) offloaded shares worth Rs 2,034.14 crore on October 3. Traders were also concerned as the World Bank increased its retail inflation forecast for India for 2023-24 to 5.9 per cent from the 5.2 per cent estimate made in April. Traders remained cautious as Engineering Exports Promotion Council (EEPC) stated that overall exports of engineering goods from the country have been affected by the global slowdown. It said during April to August in 2023, overall engineering exports dropped 4.55 per cent to $44.62 billion as against $ 46.74 billion in the previous similar period of 2022.  Weak trade continued over the Dalal Street in afternoon deals, as sentiments remained down-beat after Crisil Ratings indicated that while rating upgrades continue to outnumber the downgrades substantially due to robust domestic demand and government capital expenditure from April to September 2023, sluggish exports are beginning to add pressures to the credit quality of some Indian firms. It also said export-oriented sectors such as textiles (cotton spinning) and diamond polishing might experience a contraction in operating cash flows. However, key indices managed to trim some losses in late afternoon deals, as traders took some support with the Reserve Bank of India’s (RBI) monthly data report on ‘India’s International Trade in services’ showing that India's services exports surged 8.4% year-on-year to $28,719 million in August 2023, while imports of services during August 2023 fell 0.8% to $15,103 million. Finally, the BSE Sensex fell 286.06 points or 0.44% to 65,226.04 and the CNX Nifty was down by 92.65 points or 0.47% to 19,436.10.

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