Extending southward journey for second straight session, Indian equity benchmarks ended the session with a cut of around three fourth of a percent, breaching their crucial 32,300 (Sensex) and 10,050 (Nifty) levels. Markets showed solemnity since beginning and never looked confident of recovering till end to close near intraday lows, as investors opted to remain on sidelines pondering rate outlook, a day after the RBI maintained its neutral stance, citing record low inflation. Most of the market participants are not expecting any further rate cut this year, saying the present low inflation print is not sustainable. Sentiments also remained dampened with report showing that the services sector contracted in July and fell to its lowest level in nearly four years following implementation of the Goods and Services Tax (GST). Nikkei India Services Purchasing Managers' Index fell to 45.9 in July. Some concern also came with the Reserve Bank's third bi-monthly monetary policy statement that farm loan waivers by state governments could result in possible fiscal slippages and undermine the quality of public spending. Some concerns also came with the private report stating that more than 31 percent of the chief financial officers (CFOs) from various companies feel implementation of GST is challenging and manufacturing is the most affected sector. Market participants shrugged off Finance Minister Arun Jaitley's indications that there could be scope for rationalisation of rates under the GST as its implementation progresses. Jaitley also said that he was under pressure to change the GST Network which people said was faulty but felt the structure was correct. Traders also failed to get any solace with John Chambers', Chairman of the newly-formed US-India Strategic Partnership Forum, prediction that India would turn out to be a role model for the world economies. He said India will figure among the top three economic powers in the world over the next 10-15 years. Finally, the BSE Sensex declined 238.86 points or 0.74% to 32,237.88, while the CNX Nifty was down by 67.85 points or 0.67% to 10,013.65.

The US markets closed mostly lower on Thursday, while the Dow industrials logged a seventh consecutive all-time high. Investors are leaning a little bit more cautiously simply for the very, very near term because of bullish sentiment being higher than normal. On the economy front, a reading of service-sector activity slowed in July to the weakest rate of growth in 11 months. The Institute for Supply Management said its nonmanufacturing index fell to 53.9% in July from 57.4% in June. Gauges for production, new orders, employment, deliveries, inventories, order backlogs and new-export orders all decelerated. On the other hand, applications for unemployment benefits fell in late July and remained near a 44-year low, highlighting the strength of a US labor market that's showing little sign of waning. Initial jobless claims from July 23 to July 29 declined by 5,000 to 240,000. New claims count people who apply for unemployment benefits after losing their jobs. The average of new claims over the past month, which gives a more stable picture of layoff trends, also fell slightly to 241,750. New applications for benefits have totaled less than 300,000 for 126 straight weeks, extending the longest streak since the early 1970s. The Nasdaq lost 22.31 points or 0.35 percent to 6,340.34, the S&P 500 edged lower by 5.41 points or 0.22 percent to 2,472.16, while the Dow Jones Industrial Average added 9.86 points or 0.04 percent to 22,026.10. 

Crude oil futures declined on Thursday, failing to hold $50 a barrel mark after jumping to 8-week highs. Traders looked ahead to an Opec meeting next week for fresh insight into the oil cartel's commitment to improve compliance with the deal to curb production, traders, however downplayed the importance of the meeting next week, suggesting oil prices may struggle to sustained upward momentum. Benchmark crude oil futures for September delivery slumped by $0.56 or 1.1percent to $49.03 on the New York Mercantile Exchange. In London, Brent crude for September delivery ended lower by 0.63 percent at $52.03 a barrel on the ICE.

Indian rupee pared some of its early gains but still ended marginally higher against the American currency on Thursday on continued dollar selling by banks and exporters. Local currency got some support with finance ministry's statement that the RBI's decision to cut key policy rate by 0.25 percent is an important step to achieve sustained growth consistent with moderate inflation and India's potential. However, firm dollar against some global currencies overseas and massive losses of domestic equity markets restricted further gains. On the global front, dollar inched away from a 15-month low versus a basket of currencies on Thursday, but was still looking wobbly due to doubts about whether there will be another US interest rate rise this year. Finally, the rupee ended at 63.68, 2 paise stronger from its previous close of 63.70 on Wednesday.

The FIIs as per Thursday's data were net buyers in equity and debt segments both. In equity segment, the gross buying was of Rs 4106.42 crore against gross selling of Rs 3538.51 crore, while in the debt segment, the gross purchase was of Rs 1532.36 crore with gross sales of Rs 494.34 crore.

The US markets made a mixed closing in last session ahead of the monthly jobs data. Trade remained lackluster even though a report from Labor Department showed a modest decrease in first-time claims for unemployment benefits in the week ended July 29th. The Asian markets have made a mixed start too, awaiting the monthly US jobs report and on buzz that U.S. Special Counsel Robert Mueller was said to have impaneled a grand jury in the ongoing Russia probe. The Indian markets suffered sharp cuts in the last session with major benchmarks deposing over half a percent, dragged down by banking pack on concern that their net interest margins will come down in a low interest-rate environment. Today, the start is likely to be mildly in green but cautiousness will prevail on global developments. There will be buzz in the banking sector stocks, as the Lok Sabha passed the Banking Regulation (Amendment) Bill, 2017, after Finance Minister Arun Jaitley declared that criminal and recovery proceedings will be started against defaulters of bank loans who divert money and asserted that no one can claim equality in not repaying loans to the banks. The textile stocks too may see some action, as foreign direct investment (FDI) in textile sector more than doubled to $618.95 million during 2016-17 from $230.13 million in the previous fiscal. The aviation stocks will be in focus, as a global airline association, the International Air Transport Association (IATA) has said that India's domestic passenger traffic grew by 20.3 per cent in June. There will be lots of earnings reaction to keep the markets in action.

Support and Resistance: NSE (Nifty) and BSE (Sensex)

Nifty Top volumes

• Wipro has entered into partnership with Tricentis and a thought leader in the automated testing space, for Quality Engineering
• Axis Bank has issued Senior Fixed Rate Bonds aggregating to $500 million under the GMTN Programme through its DIFC branch.
• Maruti Suzuki India has introduced Auto Gear Shift option in top-end Alpha trim of its premium urban compact vehicle - IGNIS.
• SBI is planning to raise Rs 2,000 crore by allotting 20,000 AT1 Basel-III compliant non-convertible, perpetual, subordinated bonds in the nature of debentures to various investors.