August series futures and options (F&O) contract expiry day turned out to be an extremely disappointing affair for the Indian markets as the local benchmarks capitulated to the unrelenting selling pressure amid extremely high volatility. The optimism in domestic markets petered out completely by the end of trade and the benchmarks even drifted into the negative territory despite getting off to a gap-up opening. The key gauges suffered a setback in afternoon trades as sudden bouts of profit booking emerged in the local markets immediately after a somber European market opening. German business sentiment unexpectedly declined the most in more than four years in August in a sign that companies are waking up to the consequences Britain's decision to quit the European Union will have on the economy. Further, market participants across the globe are keenly awaiting signals on key policy rates from US Federal Reserve Chair Janet Yellen at the Kansas City Fed's annual Monetary Policy Symposium in Jackson Hole, Wyoming. On the domestic front, sentiments were undermined by the private report indicating that India Inc is enduring its worst earnings drawdown of the last 20 years, burdened by weak growth, high interest costs with excessive private sector debt and over-capitalised balance sheets. Also raising anxiety among investors Reserve Bank Deputy Governor S. S. Mundra said the level of bad loans and restructured assets rose to 12%, while for the public sector banks it has jumped to 15.4% as of the June quarter. However, investors got some comfort with Goldman Sachs' report that Indian economy is expected to clock 7.9 per cent growth in the current fiscal driven by better monsoon, government pay hike, key reforms and FDI inflows. On the global front, Asian equity markets remained under pressure. Back home, the local benchmark got off to a positive start in the morning trade as investors sentiments got buoyed after Commerce and Industry Minister Nirmala Sitharaman pitched for as much as 200 basis points or 2%, interest rate cut by RBI to help the cash-starved MSME sector. Finally, the BSE Sensex slumped by 224.03 points or 0.80% to 27835.91, while the CNX Nifty dropped 58.10 points or 0.67% to 8,592.20.

The US markets closed lower on Thursday, with investors reluctant to make big bets the day before a much-anticipated speech by Federal Reserve Chairwoman Janet Yellen that will be picked apart for clues to the central bank's next rate move. Kansas City Fed President Esther George stated that she thought it was time to raise interest rates. The Kansas City Fed President added that she was not trying to cool off the economy by moving to high interest rates. On the economy front, the number of Americans who applied for unemployment benefits last week stretching from August 14 to August 20 fell by 1,000 to 261,000 and remained near post-recession lows, indicating a healthy labor market in which few people are losing their jobs. The average of new jobless claims over the past month dropped by 1,250 and stood 264,000. Meanwhile, orders for durable or long-lasting goods made in the US surged 4.4% in July to mark the biggest gain since last fall, a sign that an extended decline in production may be over. The Dow Jones Industrial Average lost 33.07 points or 0.18 percent to 18,448.41, Nasdaq was down 5.50 points or 0.11 percent to 5,212.20, while S&P 500 dropped 2.97 points or 0.14 percent to 2,172.47. 

Crude oil futures paring all the early losses inched higher on Thursday, despite reports suggesting Saudi Arabia will not curb production. The early fall were due to the market focusing on oversupply and fading hopes of a production freeze, as Saudi Arabian Energy Minister Khalid Al-Falih does not believe it is necessary for any “significant intervention” in oil markets at this time. Traders are now looking ahead to tomorrow's Jackson Hole speech on interest rates from Fed Chair Janet Yellen. Benchmark crude oil futures for October delivery dropped $0.56 or 1.2 percent to close at $47.33 a barrel on the New York Mercantile Exchange. In London, Brent oil futures for October delivery declined by $0.91 or 1.82 percent to $49.84 a barrel on the ICE.

Indian rupee strengthened marginally against US dollar on Thursday ahead of expected measures from the Reserve Bank of India to enhance corporate bond markets and a speech from US Fed chair Janet Yellen that may yield clues on U.S. interest rate policy. Domestic currency got some support after Commerce and Industry Minister Nirmala Sitharaman pitched for as much as 200 basis points or 2%, interest rate cut by RBI to help the cash-starved MSME sector. Besides, a weakness in US greenback against some major currencies overseas too supported the rupee. Finally the rupee ended at 67.05, stronger by 6 paise from its previous close of 67.11on Wednesday.

The FIIs as per Thursday's data were net sellers in equity and debt segments both. In equity segment, the gross buying was of Rs 3108.33 crore against gross sell of Rs 3140.90 crore, while in the debt segment, the gross purchase was of Rs 1764.76 crore with gross sales of Rs 2132.41 crore.

The US markets made a marginally lower close in last session, adding losses posted in the previous session, as traders continued to look ahead to a speech by Federal Reserve Chair Janet Yellen on Friday. The Asian markets have made mostly a lower start ahead of a speech by Federal Reserve Chair Janet Yellen that may shed light on the US interest-rate outlook. The Indian markets suffered sharp cuts in last session, losing their momentum in final hours to end the August series on a lower note. Today, the start of the new series is likely to be flat-to-green, strong rollovers to the September series indicates the optimism of the traders, though markets will be a bit cautious ahead of Janet Yellen's speech. Market will see some recovery with the Reserve Bank of India (RBI) announcing a raft of measures to boost investor participation and market liquidity in both the corporate bond and currency markets. These include the staggered reduction of banks' loan exposure, increased participation by overseas investors in corporate bonds and making top-rated bonds eligible for borrowing from Reserve Bank for liquidity needs. Meanwhile, in a bid to keep nation's tax laws in conformity with changing times, the Income Tax Department has created a permanent mechanism for seeking inputs from its officers for changes required in the direct tax regulations. There will be some buzz in the gems and jewellary stocks on report that exports of gems and jewellery grew 11.7 percent to $ 11.4 billion during the first four months of the current fiscal, driven largely by demand in India's major markets like the US. PSU banks too will be in action on reports that the government is drawing up a contingency plan to support state-run banks should they collapse under the burden of bad loans.

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

Nifty Top volumes

• TCS has introduced new software that enables retailers to leverage insightful data either from in-store sensors or other Internet of Things devices to deepen relationships with customers through more personalized customer engagement strategies.
• Tata Power has crossed the 2 million consumer base milestone across the Country.
• Tata Steel has begun exporting of Tata Ferroshots from its new steel plant located in Kalinganagar in Odisha.
• Axis Bank has rolled out Augmented Reality feature on its Mobile App.
• Power Grid Corporation of India is planning to raise up to Rs 14000 crore through issuance of bonds from domestic and external sources in 2017-18.