Indian equity benchmarks erased early gains to end lower for the second straight session on Thursday, tracking weak cues from global markets and record rise in Covid-19 cases. The start of the markets was on a promising note, as traders took encouragement with the International Monetary Fund's (IMF) statement that the stimulus measures taken by India are substantial, but there is more scope for such measures even after considering the limited fiscal space. Traders took note of report that the Ministry of Home Affairs (MHA) issued new guidelines for opening up of more activities in areas outside containment zones, as a part of Unlock 3.0, which will come into effect from August 1. The process of phased re-opening of activities has been extended further. Sentiment remained upbeat with Niti Aayog's draft paper titled 'Towards Responsible AI For All' stated that the government is likely to fund specific research projects in responsible Artificial Intelligence (AI) and introduce ethics of AI into the university curriculum as the new-age technology is expected to boost India's annual growth rate by 1.3 per cent by 2035. But, markets lost momentum and turned negative in the second half of the session, as domestic traders got cautious about former RBI deputy governor Viral Acharya's statement the suspension of the bankruptcy code for a whole year could be a potential problem for the country. Some weakness also came as Federal Reserve expressed concern that the viral outbreak will act as a drag on the economy and hiring in coming months and that it plans to keep its benchmark short-term interest rate pegged near zero. Adding some worries on the street, Moody's Investors Service said that the Reserve Bank of India's recent financial stability report and results of banking system stress tests show that banks' gross non-performing assets will rise meaningfully under all four stress test scenarios with their common equity tier one ratio declining by one to two percentage points. Finally, the BSE Sensex lost 335.06 points or 0.88% to 37,736.07, while the CNX Nifty was down by 100.70 points or 0.90% to 11,102.15.

The US markets ended mostly lower on Thursday following the release of a report from the Commerce Department showing a record contraction in US economic activity in the second quarter (Q2).  The report said real gross domestic product plummeted at an annual rate of 32.9 percent in the second quarter following a 5.0 percent slump in the first quarter. While GDP showed the biggest quarterly drop on record, the plunge was not quite as steep as the 34.1 percent nosedive expected by street. Consumer spending led the decrease, cratering by 34.6 percent in the second quarter, as the coronavirus-induced lockdowns in late March and April forced many consumers to stay at home. Meanwhile, first-time claims for US unemployment benefits increased for the second straight week in the week ended July 25th, according to a report released by the Labor Department, although claims rose by less than expected. The report said initial jobless claims edged up to 1.434 million, an increase of 12,000 from the previous week's revised level of 1,422,000. Street had expected jobless claims to rise to 1.450 million from the 1.416 million originally reported for the previous week. The increase in jobless claims seen over the past two weeks came on the heels of decreases in the fifteen preceding weeks. Besides, lack of progress in talks between congressional Democrats, Republicans and the White House on a new coronavirus aid package also weighed on sentiment.

Crude oil futures ended deeply in red on Thursday pressured by worries a resurgence in coronavirus cases around the world will cause demand to falter as major oil producers begin relaxing output curbs. The number of COVID-19 cases around the world climbed above 17 million on Thursday, according to data aggregated by Johns Hopkins University, and the death toll rose to 667,688. The US case tally climbed to 4.43 million and the death toll rose to 151,716, after crossing 150,000 late Wednesday. California and Florida posted single-day record death numbers on Wednesday and California added more than 12,300 cases. Crude oil futures for September dropped $1.35 or 3.3 percent to settle at $39.92 a barrel on the New York Mercantile Exchange. September Brent crude fell 81 cents or 1.9 percent to settle at $42.94 a barrel on London's Intercontinental Exchange.

Indian rupee turned lower on Thursday, due to sustained dollar demand from banks and importers amid higher dollar overseas. The domestic currency weighed down despite the Federal Reserve expressed concern that the viral outbreak will act as a drag on the economy and hiring in the coming months and said it plans to keep its benchmark short-term interest rate pegged near zero. On the global front; dollar caught a little support on Thursday after the Federal Reserve offered no real clues about its next moves, beyond an expected pledge to keep policy easy as a fresh surge in coronavirus infections stalls the U.S. economic recovery. Finally, the rupee ended at 74.84, 4 paise weaker from its previous close of 74.80 on Wednesday.

The FIIs as per Thursday's data were net sellers in both equity segment and debt segment. In equity segment, the gross buying was of Rs 5651.36 crore against gross selling of Rs 5942.23 crore, while in the debt segment, the gross purchase was of Rs 524.24 crore with gross sales of Rs 707.01 crore. Besides, in the hybrid segment, the gross buying was of Rs 19.59 crore against gross selling of Rs 18.14 crore.

The US markets ended mostly lower on Thursday after US economy recorded a worst quarterly plunge ever of 33 per cent annualized rate in the June quarter. Asian markets are trading mixed on Friday amid weakness on Wall Street overnight. Indian markets ended lower on Thursday amid mixed global cues and the expiry of July series derivative contracts. Today, the markets are likely to get positive start amid mixed Asian cues. Traders will be getting encouragement as trade body CII said the new set of relaxations introduced while extending the lockdown till August 31 in Tamil Nadu would pave way for quick revival of the economy besides ensuring livelihood of people. Some support will also come with Commerce and Industry Minister Piyush Goyal's statement that the government is working on production-linked incentives for 12 major sectors like Active Pharmaceutical Ingredients and electronics. Traders may take note of former RBI Governor Raghuram Rajan's statement bold government reform that triggers animal spirits and implemented effectively is essential for India to come out of the Covid-19 setbacks. Besides, Prime Minister Narendra Modi held a brainstorming session with financial sector regulators and discussed various measures to revive the economy hit hard by Covid-19 crisis. Though, some cautiousness may be there with report that India has recorded worst-ever spike of over 54,900 coronavirus cases, taking its tally to 1,639,350. With this, India has recorded over 100,000 cases in just 48 hours. The country's death toll now stands at 35,786. It has overtaken Italy to have the fifth-most deaths due to coronavirus. Gold related stocks will be in focus with WGC's report that demand of gold in India declined 70.12% during the April-June quarter of 2020 to 63.7 tonnes over last year amid nationwide lockdown to prevent the spread of COVID-19. Also, there will be lost of earnings based reactions to keep markets buzzing.

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

Nifty Top volumes

• Tech Mahindra has signed global partnership with Hinduja Group's CyQureX to jointly offer cyber security solutions. 
• TCS has partnered with Vistaprint to help the latter successfully migrate to SAP S/4HANA on the cloud. 
• ONGC has received approval to offer and issue 5,000 unsecured, redeemable, non-cumulative, taxable, NCDs. 
• NTPC has decided to raise Rs 1,000 crore on July 31, 2020, through private placement of unsecured non-convertible bonds.