Indian benchmark indices reversed their earlier gains to end lower on Thursday, as investors turned jittery after weak opening of European markets. All eyes are now on the European Central Bank, which will release the minutes of the latest policy meeting. Yesterday the local market came under pressure on the report that the European Central Bank could start winding down its quantitative-easing program ahead of schedule. The optimism in domestic markets petered out completely by the end of trade and the benchmarks even drifted in to the negative territory to extend their southward journey for second straight day despite getting off to a gap-up opening. Sentiments remained subdued with International Monetary Fund's (IMF's) report that countries such as India have taken steps to reduce non-performing loans, but stressed that additional and more timely actions is needed. The IMF report also warned of rising medium-term risks and said global financial stability will now depend on how well financial institutions adapt to the new era of low growth and low interest rates. Also, India's service activity lost steam in September after touching a three year high last month. The seasonally adjusted Nikkei India Services Business Activity Index was down to 52.0 in September from August's 43-month high of 54.7, the latest reading pointed to a slower rate of expansion that was moderate overall. Besides, weakness in Indian rupee against the dollar too dampened sentiments. However, losses remained capped as the RBI Governor Urjit Patel signaled a marked departure in policy approach from his predecessor's unwavering focus on price stability. He said that the NPA situation is an important issue for the RBI in India. We will be dealing with it with firmness but also with pragmatism so that the economy does not feel any lack of credit. Some support also came in from report that foreign portfolio investors (FPIs) bought shares worth a net Rs 243 crore on October 05, 2016.

The US markets closed mostly lower on Thursday, as investors abstained from making big bets ahead of Friday's much-anticipated September jobs report, which will help them gauge the likelihood that the Federal Reserve will raise interest rates before the end of 2016. Stocks sold off in early trade, but the market recouped much of its losses after a high-ranking European Central Bank official repudiated reports that the central bank had discussed tapering its bond-buying program. On the economy front, the number of people who applied for unemployment benefits fell by 5,000 to 249,000 at the end of September stretching from September 25 to October 1, showing an extremely low level of layoffs just a day before the government issues a key report on how many people found jobs last month. Initial jobless claims have been under 270,000 for 14 straight weeks, a feat that last occurred in the waning days of the Nixon administration. The Dow Jones Industrial Average lost 12.53 points or 0.07 percent to 18,268.50, Nasdaq dropped 9.17 points or 0.17 percent to 5,306.85, while S&P 500 was up 1.04 points or 0.05 percent to 2,160.77. 

Crude oil futures surged on Thursday to reach its four months high, rising back above $50 a barrel as Hurricane Matthew threatened to interrupt supplies from the southeast. There were reports of another informal OPEC meeting on output cuts and plunging US crude inventories. Prices also continued getting support by the surprise drop in US crude stocks for a fifth week in a row, bringing the total drawdown since the beginning of September to 26 million barrels. Benchmark crude oil futures for November delivery gained $0.61 or 1.2 percent to close at $50.44 a barrel on the New York Mercantile Exchange. In London, Brent oil futures for December delivery declined by $0.65 or 1.3 percent to $52.51 a barrel on the ICE.

Indian rupee extended its weakness for the second consecutive day on Thursday on increased demand for the American currency from importers and banks amid a bout of global risk aversion. The dollar has staged a broad-based rally against all its major trading partners on growing confidence of economic activity. The better-than-forecast US ISM non-manufacturing data, which increased the probability of a US Federal Reserve rate hike this year, also dampened the sentiments. Investors remained worried with International Monetary Fund's (IMF's) report that countries such as India have taken steps to reduce non-performing loans, but stressed that additional and more timely actions is needed. The IMF report also warned of rising medium-term risks and said global financial stability will now depend on how well financial institutions adapt to the new era of low growth and low interest rates. Also, sluggish trading in domestic equity market also impacted the domestic currency. All eyes are now on the European Central Bank, which will release the minutes of the latest policy meeting. Finally, the rupee ended at 66.69, 18 paisa weaker from its previous close of 66.51 on Wednesday.

The FIIs as per Thursday's data were net buyers in equity segment, while they were net sellers in debt segment. In equity segment, the gross buying was of Rs 3860.44 crore against gross selling of Rs 3204.79 crore, while in the debt segment, the gross purchase was of Rs 1460.62 crore with gross sales of Rs 3803.20 crore. 

The US markets made a flat closing in last session as traders looked ahead to the release of the Labor Department's closely watched monthly jobs report on Friday. Traders even overlooked the Labor Department's report showing a modest drop in initial jobless claims in the week ended October 1st. The Asian markets have made mostly a weak start and some of the indices are down by over half a percent in early deals after a sudden plunge in the pound spooked investors ahead of American jobs data. The Indian markets losing their pace in final hours ended with cuts of about half a percent in last session. Today, the start is likely to be a bit soft on weak global cues, however trade may see some recovery with traders getting support from IMF's statement that India's strong reform push in 2016 is welcome and should continue apace. Adoption of the goods and services tax is poised to boost India's medium-term growth. It added that as shown by India, progress on reforms could ignite business investment (including already strong FDI inflows), further boosting domestic demand. Meanwhile, the Commerce Minister Nirmala Sitharaman lauded the increase in foreign direct investment (FDI) in India but said it will be meaningful only when it translates into increased job creation. Sitharaman said the government was now working towards adding infrastructure capabilities in tier-III cities and rural areas for the benefits of increased foreign investment to percolate down. There will be buzz in the telecom stocks, as the India's biggest auction of telecom spectrum ended on a whimper note with just Rs 65,789 crore of bids coming in over five days against an expectation of Rs 5.6 lakh crore, leaving nearly 60 percent of airwaves, including premium 4G bands, unsold.

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

Nifty Top volumes

• Bharti Airtel has unveiled 4G data services in Gujarat with the rollout of the high speed Internet services in Ahmedabad.
• ICICI Bank has reportedly acquired 11.08% stake in ABG Shipyard by converting its debt into equity.
• Yes Bank has signed a MoU with Ducati India, one of the most desired premium motorcycle brands, for its retail finance options for customers across all the dealerships.
• M&M has launched eSupro - India's first zero emission, all electric cargo and passenger vans.
• Lupin and US-based specialty pharmaceutical firm MonoSol Rx have signed a licensing agreement for multiple pediatric products.