Indian equity benchmarks extended their southward journey for fourth straight session, breaching their crucial 9,850 (Nifty) and 31,600 (Sensex) levels on escalating tensions between the US and North Korea. Markets started the session on pessimistic note and traded sluggish throughout the day, as Geopolitical worries continue to weigh on the sentiments. In the latest escalation of tensions between Washington and Pyongyang, the isolated Asian country threatened a missile strike at US territory Guam. That saber-rattling came a day after US President Donald Trump said he would respond with fire and fury like the world has never seen if the country doesn't halt its threats. Back on regional turf, traders remained concerned with the report that India's retail inflation is expected to have picked up slightly in July after cooling in the previous three months, but likely remained well below the central bank's 4 percent medium-term target. Sentiments also remained downbeat on report that that India's agricultural exports have declined to $33.87 billion in 2016-17 from $43.23 billion in 2013-14. The primary reasons for decline in export of agricultural commodities are low commodity prices in the international market, which has made exports uncompetitive. Meanwhile, traders failed to get any sense of relief with report that a contraction in refund outgo, rich dividends from ‘Operation Clean Money' and more assessees coming under the income tax net post demonetisation, net direct tax collections surged 19.1 percent to Rs1.90 lakh crore during April-July. Investors also paid no heed to Adi Godrej's statement that despite certain teething problems under the new tax regime, the Goods and Services Tax (GST) will lead to considerable increase in the GDP in the next six months. Finally, the BSE Sensex declined 266.51 points or 0.84% to 31,531.33, while the CNX Nifty was down by 87.80 points or 0.89% to 9,820.25.

The US markets fell sharply on Thursday, with all the indexes tumbling for a third straight session for the first time since mid-April, amid a persistent war of words between the US and North Korea. Thursday also marked the worst one-day percentage drop for all three benchmarks since May 17. Geopolitical tension gained momentum after a North Korean army commander said, sound dialogue isn't possible with President Donald Trump and only absolute force can work on him. North Korea also laid out detailed plans of how it would launch a missile strike on US military bases in Guam. On the economy front, the federal government's budget deficit fell sharply in July, but the shortfall is up 11% for the fiscal year to date. In July the government ran a deficit of $43 billion, down from $113 billion in the same month a year ago. Meanwhile, initial claims for US unemployment-insurance benefits inched higher in the latest week but continued to signal a healthy labor market. The number of people who applied for US unemployment-insurance benefits rose by 3,000 to 244,000 in the week that ended August 5. The Dow Jones Industrial Average lost 204.69 points or 0.93 percent to 21,844.01, the Nasdaq dropped 135.46 points or 2.13 percent to 6,216.87, while the S&P 500 edged lower by 35.81 points or 1.45 percent to 2,438.21.

Crude oil futures fell sharply following the equities, as market participants questioned Organization of the Petroleum Exporting Countries' (Opec's) commitment to the global pact to curb production in after OPEC admitted its production rose in July despite a supply quota agreement with Russia. The cartel pumped oil at a relatively robust pace even as Saudi Arabia tried to get smaller members to comply. Opec's output rose by roughly 0.5%, to 32.87 million barrels a day last month, up by 172,600 barrels from June. Benchmark crude oil futures for September delivery declined by $0.82 or 1.9 percent to $48.72 on the New York Mercantile Exchange. In London, Brent crude for September delivery ended lower by 1.16 percent at $52.09 a barrel on the ICE.

Indian rupee, after making a weak start, depreciated substantially against dollar on Thursday on increased demand for the American currency from importers and banks amid foreign fund outflows. Traders remained concerned with the report that India's retail inflation is expected to have picked up slightly in July after cooling in the previous three months, but likely remained well below the central bank's 4 percent medium-term target. The rupee sentiment was also hit as the dollar recovered from eight-week lows against some currencies overseas and weak trade in the domestic equities market. On the global front, dollar rose against a trade-weighted basket of currencies on Thursday as investors consolidated positions with the low-yielding Swiss franc and Japanese yen supported amid deepending anxiety over tensions between the United States and North Korea. Finally, the rupee ended at 64.07, 24 paise weaker from its previous close of 63.83 on Wednesday.

The FIIs as per Thursday's data were net sellers in equity segment, while they were net buyers in debt segment. In equity segment, the gross buying was of Rs 3644.31 crore against gross selling of Rs 4073.05 crore, while in the debt segment, the gross purchase was of Rs 1607.96 crore with gross sales of Rs 274.40 crore.

The US markets suffered sell-off in the last session, adding to the modest losses posted in the two previous sessions. Geopolitical concerns continued to weigh on Wall Street amid an ongoing escalation in tensions between the U.S. and North Korea. The Asian markets have made a weak start with some indices witnessing cut of over a percent in early deals, tailing the slump in US markets. Investors headed for havens leaving the equity on rising Korean tension. The Indian markets continued their bearish trend in last session, extending losses by another about a percent. Apart from the geo-political worries, markets continued reeling under pressure of SEBI's crackdown on shell companies and a stand-off in the Doklam area of the Sikkim sector between Indian and Chinese troops. Today, the start will once again be in negative zone and the benchmarks will be opening gap-down with Nifty breaching the 9800 mark. There will be some pressure with report that the Reserve Bank of India (RBI) has halved its dividend payout to the government to Rs 30,659 crore for the fiscal ended June 2017. Last fiscal, the RBI had transferred Rs 65,876 crore surplus as dividend to the government. Meanwhile, according to the Medium-Term Expenditure Framework (MTEF) Statement of the government, the proportion of revenue expenditure in the total expenditure which is budgeted to be 85.6 percent in the current fiscal, is projected to be roughly the same in 2018-19 and decrease to 85 percent in 2019-20. Markets however, may get some support with government's statement that the implementation of GST and increased surveillance post demonetisation will help increase the tax-GDP ratio to 11.9 percent by 2019-20. The gross tax-GDP ratio in 2017-18 is estimated to be around 11.3 percent. There will be some buzz in the oil & gas sector stocks, as the government in its mid-year expenditure framework has confirmed that it will aim to eliminate subsidy on LPG by March 2018. There will be lots of important earnings announcements too to keep the markets in action. There will be some buzz from the primary markets too, as Cochin Shipyard, which saw strong demand from investors for its initial share sale offer, will make its debut today. The issue was oversubscribed 76.19 times.

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

Nifty Top volumes

• Mahindra & Mahindra's Farm Equipment Sector has launched its small tractor 'Mahindra JIVO'.
• Tata Steel is planning to raise Rs 10,000 crore through issue of non-convertible debentures on private placement basis.
• Maruti Suzuki India has revamped its True Value operations, designed to make pre-owned cars more attractive and transparent for its customers.
• Tata Motors' subsidiary -- Jaguar Land Rover has opened bookings for the fifth generation of Land Rover Discovery.