Indian equity benchmarks snapped a two-day gaining streak to settle lower on Tuesday amid escalating tensions in the Middle East. Besides, investors were cautious ahead of the US Federal Reserve's interest rate decision. Markets made a slightly positive start, but soon slipped into red and ultimately closed the day on a negative note due to unabated foreign fund outflows. Foreign Institutional Investors (FIIs) offloaded equities worth Rs 1,761.86 crore on Monday, according to exchange data. Traders took note of a private report that India and the UK don't expect a free trade agreement to be announced until after state elections in the South Asian nation are completed in December. There are still some differences around whether taxation will be included in a proposed investment protection pact, as well as the UK's demand that tariffs be cut on electric vehicle exports to India. However, downside remained capped with sharp fall in crude oil prices overnight. Some support also came with NITI Aayog CEO BVR Subrahmanyam's statement that a vision document is being prepared for India to become a developed economy of about $30 trillion by 2047. The vision document will outline the institutional and structural changes/ reforms that will be needed for the country to become a developed nation by 2047. Meanwhile, India has called for starting formal negotiations by WTO members to reform the dispute settlement body of the World Trade Organisation, as the present informal deliberations are creating hindrance for several nations to participate in the talks. The formal talks on the subject can help in arriving at some kind of consensus by the 13th ministerial conference (MC), the highest decision making body of the WTO, in Abu Dhabi in February 2024. Finally, the BSE Sensex fell 237.72 points or 0.37% to 63,874.93 and the CNX Nifty was down by 61.30 points or 0.32% to 19,079.60.

The US markets ended higher on Tuesday as traders seemed reluctant to make significant moves ahead of the Federal Reserve's monetary policy announcement on Wednesday. While the Fed is widely expected to leave interest rates unchanged, traders will pay close attention to the accompanying statement for clues about the outlook for rates. However, the early weakness on markets partly reflected a negative reaction to a report from the Labor Department showing employment costs jumped by slightly more than expected in the third quarter. The Labor Department said its employment cost index shot up by 1.1 percent in the third quarter compared to economist estimates for a 1.0 percent advance. On the sectoral front, networking stocks showed a substantial rebound on the day, with the NYSE Arca Networking Index surging by 2.7 percent after tumbling to its lowest closing level in well over a year on Monday. Arista Networks (ANET) led the way back to the upside after the cloud networking solutions company reported third quarter results that beat expectations on both the top and bottom lines. Considerable strength also emerged among commercial real estate stocks, resulting in a 1.8 percent jump by the Dow Jones U.S. Real Estate Index. Housing, banking and telecom stock also turned in strong performances, while gold and airline stocks showed notable moves to the downside.

Crude oil futures ended lower on Tuesday as concerns about the outlook for energy demand weighed on the commodity. Disappointing manufacturing activity from China raised concerns about the outlook for fuel demand. Further, a stronger dollar and a report from U.S. Energy Information Administration (EIA) that showed crude oil production in the U.S. climbed to a record 13.05 million barrels per day in August hurt oil prices. Benchmark crude oil futures for December delivery fell $1.29 or 1.6 percent to settle at $81.02 a barrel on the New York Mercantile Exchange. Brent crude for January delivery lost $1.33 or 1.4 percent to settle at $85.02 a barrel on London's Intercontinental Exchange.

Indian rupee ended higher against dollar on Tuesday amid decline in crude oil prices. Traders ignored foreign fund outflows. Investors were widely expecting the Fed to keep rates unchanged for the second consecutive time. Traders took a note of a private report that India and the UK don't expect a free trade agreement to be announced until after state elections in the South Asian nation are completed in December. There are still some differences around whether taxation will be included in a proposed investment protection pact, as well as the UK's demand that tariffs be cut on electric vehicle exports to India. On the global front, yen weakened on Tuesday after a small step by the Bank of Japan (BOJ) towards ending years of monetary stimulus failed to appease some investors who had expected a bigger move. Finally, the rupee ended at 83.25 (Provisional), higher by 1 paisa from its previous close of 83.26 on Monday.

The FIIs as per Tuesday'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 6724.15 crore against gross selling of Rs 8421.48 crore, while in the debt segment, the gross purchase was of Rs 346.71 crore with gross sales of Rs 280.31 crore. Besides, in the hybrid segment, the gross buying was of Rs 5.64 crore against gross selling of Rs 2.91 crore.

The US markets ended higher on Tuesday as Wall Street geared up for the Federal Reserve's latest policy decision on interest rates after closing out a terrible month. Asian markets are trading mostly in green on Wednesday with Japan's Nikkei rallying amid a weakening yen, a day after the Bank of Japan tweaked its loose monetary policy. Indian markets ended in red with marginal cut on Tuesday as investors' sentiment remained sanguine amid aggressive bombing by Israel in Gaza region. Today, start of November month is likely to be negative amid nervousness ahead of the US Federal Reserve's meeting kept investors on the sidelines. Investors will be eyeing manufacturing PMI data to be out later in the day for more directional cues. Foreign fund outflows likely to dent sentiments. Foreign institutional investors sold shares worth Rs 696.02 crore on October 31, provisional data from the National Stock Exchange showed. Traders will be concerned as the output of eight key infrastructure industries - known as the core sector - slowed to a four-month low of 8.1 per cent in September, on the back of a high base and a slowdown in seven constituent sectors. In September last year, the core sector output had grown 8.3 per cent. The print for August 2023 was also revised slightly upwards to 12.5 per cent, from 12.1 per cent estimated earlier. Besides, Central government's fiscal deficit touched 39.3 per cent of the full year target in the first half of the current financial year, slightly higher than 37.3 per cent recorded in the year-ago period. Data released by the Controller General of Accounts (CGA) showed that in actual terms, the fiscal deficit or the gap between expenditure and revenue worked out at Rs 7.02 lakh crore at the end of September 2023. However, some respite may come later in the day as Shaktikanta Das, governor of the Reserve Bank of India (RBI), said India's second-quarter gross domestic product (GDP) growth figure, in all probability, will surprise everyone on the upside. Traders may take encouragement with data released by the Controller General of Accounts (CGA) showed that the Centre's tax collections continued to exhibit buoyancy with gross-tax revenue (GTR), net of refunds, recording a sharp 16.3% year-on-year growth in the first half of FY24. This compares with 10% growth budgeted for the whole fiscal year. There will be some buzz in electric vehicle related stocks as ICRA's research showed that electric vehicle penetration continues to improve at a healthy pace, spurred by government support in the form of subsidies, enhanced awareness, and increasing product launches. It expects electric bus, two-wheeler and three-wheeler penetration to grow significantly by FY25. Stocks of oil & gas, and aviation industry will be in focus as India on October 31 hiked windfall tax on petroleum crude to Rs 9,800/ton from Rs 9,050/ton with effect from November 1. The windfall tax on aviation turbine fuel has been cut to nil from 1 rupee per litre and diesel reduced to Rs 2/litre from Rs 4/litre. There will be some reaction in sugar industry stocks as Indian Sugar Mills Association (ISMA) said India's gross sugar production is estimated to decline by 8% to 33.7 million tonne (MT) in the 2023-24 season (October-September) compared to previous season. Meanwhile, Q2 earnings of Sun Pharma, Tata Steel, Britannia, Godrej Consumer, Ambuja Cements, Hero Motorcorp, Adani Wilmar, and IGL, among others will be on the radar.

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

Nifty Top volumes

• L&T's Hydrocarbon Business has secured LoI for yet another Ultra-Mega Onshore project from a prestigious client in the Middle East further to the recent Ultra-Mega project award for a Gas Compression plant.
• Gail (India) has reported 87.20% rise in its consolidated net profit at Rs 2442.18 crore for the Q2FY24 as compared to Rs 1304.61 crore for the same quarter in the previous year. 
• Power Grid Corporation of India has acquired Beawar Dausa Transmission for 'Transmission system for evacuation of power from REZ in Rajasthan (20GW) under Phase-III Part H', on BOOT basis from the Bid Process Coordinator - PFC Consulting. 
• Tata Motors has secured an arbitral award amounting to Rs 765.78 crore as compensation for their investment in the now-defunct Singur plant.