Indian shares look set to open on a flat note Thursday after the country recorded its highest single-day Covid count in over five months the previous day with 53,364 people testing positive for the virus.
A total of 771 Covid variants, including a "double mutant", have been found across 18 Indian states but there is no evidence to link the current surge in some states to these strains, officials said on Wednesday.
In its latest Global Economic Outlook, Fitch Ratings has upgraded India's GDP forecast for FY22 to 12.8 percent from 11 percent, citing a stronger statistical effect, a looser fiscal stance and better virus containment.
Benchmark indexes Sensex and the Nifty slumped 1.7 percent and 1.8 percent, respectively on Wednesday while the rupee slipped 12 paise to close at 72.55 against the U.S. dollar.
Asian stocks remain broadly higher this morning, though the upside remained limited as investors fretted about a resurgence of coronavirus infections in Europe and Japan.
Earlier in the day, the South Korean Joint Chiefs of Staff told reporters that North Korea had launched unidentified projectiles toward the sea between the Korean peninsula and Japan.
The dollar hit a fresh four-month high against the euro while oil declined after posting sharp gains overnight on concerns about possible supply disruptions.
U.S. stocks ended lower overnight as optimism around the economic recovery triggered a rotation out of technology stocks.
Treasury yields continued to pull back as Fed Chair Jerome Powell and Treasury Secretary Janet Yellen wrapped up two days of hearings in front of Congress.
The Dow edged down marginally and the S&P 500 shed 0.6 percent while the tech-heavy Nasdaq Composite index lost as much as 2 percent.
European markets ended mixed on Wednesday as spikes in virus infections and fresh lockdown measures in several countries rendered the mood cautious.
The pan European Stoxx 600 ended flat with a positive bias. The German DAX dipped 0.4 percent while France's CAC 40 index edged up marginally and the U.K.'s FTSE 100 rose 0.2 percent.
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