Indian equity bourses failed to carry on two-day record-closing streak on Wednesday, with Sensex & Nifty ending lower by around 80 & 20 points, respectively. After a weak start, indices remained under the grip of bears throughout the day, amid a private report that a spike in India's retail inflation in December has raised the chances that the Reserve Bank of India will put rate cuts on hold for some time despite economic growth languishing at more than six-year lows. Adding worries among traders, the bilateral trade between India and China declined by about $3 billion last year while India's trade deficit continues to be high amounting to $56.77 billion as both countries experienced an economic slowdown. In the last leg of the trade, key indices managed to come off their intraday low points, after the Asian Development Bank's (ADB) report indicated that sound economic policies and strong institutions have transformed Asia and the Pacific over the past five decades into a center of global dynamism. Developing Asia's share of global gross domestic product (GDP) rose from 4% in 1960 to 24% in 2018. Investors were seen taking a note of a report stating that new FICCI President Sangita Reddy has urged the government not to worry too much about the fiscal deficit and try to pump the economy by increasing investments to arrest slowdown and accelerate growth. Finally, the BSE Sensex lost 79.90 points or 0.19% to 41,872.73, while the CNX Nifty was down by 19.00 points or 0.15% to 12,343.30.

The US markets ended higher on Wednesday after President Donald Trump signed the first phase of a trade pact with China. Trump and Chinese Vice Premier Liu He signed a long-awaited preliminary trade pact in the East Room of the White House and investors were heartened by some of the details of the deal released by the Trump administration. The text of the deal includes promises by the Chinese to increase their purchases of US agricultural, manufacturing, and energy products, along with purchases of services, by more than $200 billion over the next two years, though it also states that the parties acknowledge that purchases will be made at market prices based on commercial considerations. It also includes commitments by the Chinese to enforce intellectual property theft laws and a bilateral evaluation and dispute resolution arrangement that will encourage the US and China to work jointly to resolves allegations of patent and copyright infringement or intellectual property theft. On the economic data front, a report released by the Labor Department showed a modest increase in US producer prices in the month of December. The Labor Department said its producer price index for final demand inched up by 0.1 percent in December after coming in unchanged in November. The uptick in producer prices was partly due to a jump in energy prices, which surged up by 1.5 percent in December after climbing by 0.6 percent in November. Besides, partly reflecting a notably faster rate of growth in new orders, the Federal Reserve Bank of New York released a report showing a modest acceleration in the pace of growth in regional manufacturing activity in the month of January.

Crude oil futures ended lower on Wednesday after weekly government data revealed hefty increases in domestic supplies of gasoline and distillates. The Energy Information Administration (EIA) data showed supply increases of 6.7 million barrels for gasoline and 8.2 million barrels for distillates for the week ended January 10. However, EIA data showed that US crude supplies fell by 2.5 million barrels last week, while the American Petroleum Institute on Tuesday reported an increase of 1.1 million barrels. Meanwhile, the Organization of the Petroleum Exporting Countries (OPEC) released a monthly forecast on the global oil market. The oil cartel increased its 2020 world oil demand growth forecast by 140,000 barrels to 1.22 million barrels a day, while also nudging its global economic growth forecast to 3.1% for the year ahead. Crude oil futures for February dropped 42 cents or 0.7 percent to settle at $57.81 a barrel on the New York Mercantile Exchange. March Brent declined 49 cents or 0.8 percent to settle at $64 a barrel on London's Intercontinental Exchange.

Indian rupee pared its early losses to settle marginally higher against dollar on Wednesday on selling of dollars by banks and exporters. Traders took some support with report that new FICCI President Sangita Reddy has urged the government not to worry too much about the fiscal deficit and try to pump the economy by increasing investments to arrest slowdown and accelerate growth. However, gains remain capped as anxiety remained among the traders with a private report stating that a spike in India's retail inflation in December has raised the chances that the Reserve Bank of India (RBI) will put rate cuts on hold for some time despite economic growth languishing at more than six-year lows. As per the report, the RBI's monetary policy committee (MPC) may even change its stance from accommodative to neutral at its February meeting. On the global front, sterling pound fell against US dollar on Wednesday following the release of disappointing UK inflation data in the early London session. Finally, the rupee ended at 70.82, 5 paise stronger from its previous close of 70.87 on Tuesday.

The FIIs as per Wednesday'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 4695.77 crore against gross selling of Rs 5026.91 crore, while in the debt segment, the gross purchase was of Rs 1907.44 crore with gross sales of Rs 1482.08 crore. Besides, in the hybrid segment, the gross buying was of Rs 5.15 crore against no gross selling.

The US markets ended in green on Wednesday, after President Donald Trump signed the first phase of a trade pact with China. Asian markets are trading mostly higher on Thursday after the US and China ended some uncertainties for the world economy by signing a partial trade agreement. Indian markets ended lower on Wednesday on the emergence of selling mainly in banking stocks. Today, the markets are likely to get a cautious start after data showed India's merchandise exports fell for the fifth straight month. The commerce and industry ministry data showed that exports contracted by 1.8% in December 2019 to $27.36 billion, as processed petroleum exports saw lower receipts and broad-based decline continued to plague all major foreign exchange earning sectors. Imports too declined by 8.83% $38.61 billion, bringing down the trade deficit to $11.25 billion during the month under review. Also, traders will be concerned with Former finance secretary Subhash Garg's statement that India's real fiscal deficit in FY20 is likely to be higher at 4.5-5% of GDP due to an expected shortfall in revenue, and higher spending. Though, some support may come later in the day with NITI Aayog vice chairman Rajiv Kumar's statement that the government is likely to take more measures to deal with the problem of financial sector. Meanwhile, concerned over rise in imports in the others category, Commerce and Industry Minister Piyush Goyal asked those importers to seek HSN or tariff code within 30 days from the foreign trade office, failing which the government would impose strong restrictions on their inbound shipments. There will be some buzz in the jewellery stocks as gems and jewellery industry sought a reduction in import duty on gold to 6% and on cut and polished diamonds to 2.5% to revive the sector. Infrastructure stocks will be in focus with report that the allocation for the highway sector is likely to be raised by Rs 8,000-10,000 crore in the upcoming Budget. There will be some reaction in sugar stocks with a private report that the improvement in average sugar prices by close to Rs 2/kg to Rs 32.5-33.0/kg in 9M FY2020 yoy, along with the non-increase in the cane price for sugar season, SY2020 is expected to support the profitability of the sugar mills in the near term. There will be some result reactions too, to keep the markets in action.

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

Nifty Top volumes

• Kotak Mahindra Bank's wholly owned subsidiary -- Kotak Mahindra Prime has executed a Share Purchase Agreement, for sale of its entire equity stake of 5.56% in ECIS. 
• L&T's construction arm has secured orders from prestigious clients across various Indian states for its varied businesses.  
• Sun Pharma has entered into exclusive licensing and supply agreements with Rockwell Medical for Triferic in India. 
• Yes Bank has acquired 12,73,21,500 equity shares having nominal value of Rs 10 each per share constituting around 29.97 percent of the post-issue paid-up share capital of Rosa Power Supply Company, a wholly-owned subsidiary Reliance Power.