Indian equity benchmarks, swinging between gains and losses throughout the day, managed to close Wednesday's session with decent gains for the second day in a row, tracking gains in M&M, Power Grid and Tata Steel amid a largely positive trend in global markets. After opening on a muted note, markets were trading marginally higher as traders took some support with CII-IBA survey report stating that the financial conditions are looking up in the current quarter (Q2FY21) due to policy decisions and steps the government and Reserve Bank of India have taken to support economy. But, Indian benchmarks erased those gains to turn highly volatile in morning deals, with the Finance Ministry's statement that the gross GST collection in August stood at Rs 86,449 crore, down from Rs 87,422 crore collected in July. Trading sentiments remained in lackluster mood in afternoon session, as Moody's Investors Service said India will be among the large emerging market sovereigns to have highest debt burden by 2021. Also, rising coronavirus cases is likely to dampen the sentiments in the markets. Though, markets reversed trend in late afternoon deals and ended on a bullish note, taking support from Union Minister of Commerce and Industry Piyush Goyal's statement that the whole package of the US-India trade deal is almost ready and it can be finalised when the local political situation in the United States is conducive. Traders also took note of the Directorate Generate of Foreign Trade (DGFT) latest notification has said that a limit has been imposed on total rewards under the Merchandise Exports from India Scheme (MEIS). The total reward which may be granted to an IEC (Import Export Code) holder under the scheme shall not exceed Rs 2 crore per IEC of exports made in the period September 1, 2020 to December 31, 2020. Finally, the BSE Sensex gained 185.23 points or 0.48% to 39,086.03, while the CNX Nifty was up by 64.75 points or 0.56% to 11,535.00.

The US markets ended higher on Wednesday, extending the upward move seen in the previous session, as investors drew hope from progress in the development of tests and vaccines for COVID-19.  The Nasdaq and S&P 500 once again set new record highs, while the Dow reached its best levels in over six months and is closing in on the record high set in February. Traders continued to express optimism about the economy recovering from the coronavirus-induced slowdown. Meanwhile, the Federal Reserve's Beige Book noted economic activity in the US has increased over the past several weeks, but the gains were described as generally modest. The Beige Book, a compilation of anecdotal evidence on economic conditions in the twelve Fed districts, also noted economic activity remains well below levels prior to the COVID-19 pandemic. On the economic data front, a report from payroll processor ADP showing much weaker than expected private sector job growth in the month of August. ADP said private sector employment increased by 428,000 jobs in August after rising by an upwardly revised 212,000 jobs in July. Street had expected employment to jump by 950,000 jobs compared to the addition of 167,000 jobs originally reported for the previous month.

Crude oil futures ended sharply lower on Wednesday as worries about a drop in gasoline demand and data showing a surge in oil production by Organization of the Petroleum Exporting Countries (OPEC) members. Crude oil production from OPEC rose by about 950,000 barrels per day in August, as the cartel continued to relax its production cuts. Oil prices fell despite a steep drop in US crude inventories last week. The Energy Information Administration (EIA) reported that US crude inventories fell by 9.4 million barrels for the week ended August 28, marking a sixth weekly decline in a row. The latest data released by the American Petroleum Institute (API) late Tuesday showed that US crude inventories fell by 6.4 million barrels in the week to August 28. Crude oil futures for October fell $1.25 or 2.9 percent to settle at $41.51 a barrel on the New York Mercantile Exchange. November Brent crude declined $1.15 or 2.5 percent to settle at $44.43 a barrel on London's Intercontinental Exchange.

Indian rupee depreciated significantly against dollar on Wednesday, on account of sustained dollar demand from importers and banks. Anxiety remained among traders as Moody's Investors Service stated that India will be among the large emerging market sovereigns to have highest debt burden by 2021. It stated that the coronavirus pandemic-induced deterioration in growth and fiscal dynamics will leave most large emerging market sovereigns with higher debt burdens over the next few years. Traders also remain concerned as State Bank of India's research report - Ecowrap has said that India's real GDP is expected to shrink by 10.9 percent in FY21. On the global front; emerging market currencies eased on Wednesday as dollar bounced from two-year lows on signs of a global economic rebound, with the Russian rouble among the biggest decliners ahead of treasury bond auctions. The rouble fell to 74.00 a dollar, close to a one-week low of 75.99 as investors also awaited Russia's foreign currency plan. Finally, the rupee ended at 73.03, 16 paise weaker from its previous close of 72.87 on Tuesday.

The FIIs as per Wednesday's data were net buyers in equity, while they were net sellers in debt segment. In equity segment, the gross buying was of Rs 7524.72 crore against gross selling of Rs 6950.90 crore, while in the debt segment, the gross purchase was of Rs 837.82 crore with gross sales of Rs 982.71 crore. Besides, in the hybrid segment, the gross buying was of Rs 5.71 crore against gross selling of Rs 7.41 crore.

The US markets ended in green on Wednesday after data showed US private payrolls expanded last month, but at the much slower pace than expected. Asian markets are trading mostly higher on Thursday following overnight positive cues from Wall Street. Indian markets ended higher on Wednesday led by gains in metals, media and auto stocks amid positive momentum in global markets. Today, the markets are likely to get positive start amid optimistic cues from global peers. Traders will be eyeing Finance Minister Nirmala Sitharaman review meeting with heads of banks and NBFCs on September 3 for smooth and speedy implementation of the one-time debt recast for resolution of COVID-19 related stress in bank loans. Investors are also looking ahead to the Services PMI data for August which is scheduled to be released later in the day. Some support will come with report that India has moved four places on the Global Innovation Index (GII) 2020 to rank at 48 since 2019. This makes it the third-most innovative lower middle-income economy in the world, according to the report. India at the 48th place also retains the highest rank in the central and southern Asia region. Though, rising coronavirus cases in the country likely to dampen sentiments in the markets. India has recorded its highest-ever single-day spike of nearly 83,000 in new coronavirus cases. The total now stands at 3,848,968. There may be some cautiousness with Federation of Indian Export Organisations' (FIEO) statement that the government's decision to cap export incentives under MEIS scheme at Rs 2 crore per exporter on outbound shipments made during September-December, 2020 is going to seriously affect traders. Meanwhile, India may impose anti-dumping duty on a certain type of fibre imported from European Union, Belarus, Ukraine and Peru as the commerce ministry's arm DGTR has recommended for the same after conducting a probe. Aviation stocks will be in focus with report that in further easing of restrictions, the government permitted Indian airlines to increase the number of domestic passenger flights to 60 per cent of their pre-COVID services. There will be some reaction in power stocks with rating agency ICRA's report that demand for electricity in the country improved to about 98 per cent of pre-COVID-19 level in August, led by recovery in rural areas.

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

Nifty Top volumes

• IOC's board has approved an investment of Rs 1,268 crore for setting up a needle coker unit at the firm's Paradip refinery in Odisha. 
• Coal India is planning to invest over Rs 1.22 lakh crore on projects related to coal evacuation, exploration and clean coal technologies by 2023-24. 
• Infosys is planning to hire 12,000 American workers over the next two years, bringing its hiring commitment in the country to 25,000 over five years. 
• Tata Motors has launched the XM(S) variant of the Tata Nexon.