After swinging between gains and losses, Indian equity markets closed marginally lower in a highly volatile market on Tuesday, pressured by selling in index majors Power Grid Corporation, Bajaj Finserv and Indusind Bank amid a mixed trend in global equity markets. Markets made a positive start, as traders took support with a private report stating that the pace of credit offtake continued to be robust in June 2023, with sectors clocking year-on year (YoY) growth of between 8.1 per cent and 26.7 per cent. Some support also came with report that India is expected to receive normal rainfall in the August-September period after excess precipitation in July. However, markets erased opening gains and were trading flat with negative bias in late morning deals as traders got anxious amid foreign fund outflows. According to the provisional data available on the NSE, foreign institutional investors (FII) sold shares worth net Rs 701.17 crore on July 31. Lackluster trade continued in late afternoon deals, as a labour ministry stated that retail inflation for industrial workers inched up to 5.57 per cent in June 2023 as compared to 4.42 per cent in May this year, mainly due to higher prices of certain food items. Similarly, food inflation stood at 6 per cent against 3.24 per cent in the previous month and 6.73 per cent during the corresponding month a year ago. Traders also took a note of the private business survey showing that growth in India's manufacturing activity eased in July for a second month, with some moderation in output and new orders, although the pace of expansion remained healthy. The sector has remained resilient despite declines in manufacturing activity in other major producers, suggesting Asia's third-largest economy is still on robust footing. The Manufacturing Purchasing Managers' Index, compiled by S&P Global, dipped to 57.7 last month from June's 57.8. Finally, the BSE Sensex fell 68.36 points or 0.10% to 66,459.31 and the CNX Nifty was down by 20.25 points or 0.10% to 19,733.55.

The US markets ended mostly in red on Tuesday. The modest weakness on markets may partly have reflected profit taking, as some traders looked to cash in on the strong gains posted last month. Overall trading activity remained somewhat subdued as traders continued to look ahead to Friday's closely watched monthly jobs report. On the sectoral front, gold stocks turned in some of the market's worst performances on the day, with a steep drop by the price of the precious metal weighing on the sector. With gold for December delivery tumbling $30.40 to $1,978.80 an ounce, the NYSE Arca Gold Bugs Index plunged by 3.3 percent. Airline stocks also showed a substantial move to the downside, resulting in a 2.4 percent nosedive by the NYSE Arca Airline Index. With the drop, the index fell to its lowest closing level in well over a month. Steel, banking and biotechnology stocks also saw some weakness on the day, while networking and computer hardware stocks moved notably higher. On the economic data front, a report released by the Institute for Supply Management (ISM) showed US manufacturing activity contracted for the ninth consecutive month in July. The ISM said its manufacturing PMI crept up to 46.4 in July from 46.0 in June, but a reading below 50 continues to indicate contraction. Street had expected the index to inch up to 46.8. The Commerce Department also released a report showing construction spending rose by slightly less than expected in the month of June. A separate report released by the Labor Department showed job openings edged down 9.58 million in June from 9.62 million in May.

Crude oil futures ended higher on Tuesday on profit taking after recent strong gains, and data showing a slowdown in global manufacturing activity contributed to the drop in oil prices. A report released by the Institute for Supply Management (ISM) showed U.S. manufacturing activity contracted for the ninth consecutive month in July. The ISM said its manufacturing PMI crept up to 46.4 in July from 46.0 in June, but a reading below 50 continues to indicate contraction. Street had expected the index to inch up to 46.8. Benchmark crude oil futures for September delivery fell $0.43 or about 0.52 percent to settle at $81.37 a barrel on the New York Mercantile Exchange. Brent crude for October delivery dropped $0. 52 or about 0.6 percent to settle at $84.91 a barrel on London's Intercontinental Exchange.

Indian rupee ended higher against the American currency on Tuesday despite muted trend in domestic equities. Investors got support as the output of eight core industries expanded at a five-month high of 8.2 per cent in June 2023 on healthy performance by sectors such as natural gas and steel. Besides, India collected Rs 1.65 lakh crore Goods and Services Tax (GST) for the month of July, registering growth of 11% from a year earlier. Traders overlooked report stating that India's manufacturing sector activity slowed down in the month of July but remained above the neutral level of 50.0, amid ongoing buoyant demand and muted cost inflationary pressures. On the global front, the pound was little changed on Tuesday as investors looked towards an uncertain Bank of England interest rate decision on Thursday. Finally, the rupee ended at 82.26 (Provisional), higher by 3 paise from its previous close of 82.29 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 12014.46 crore against gross selling of Rs 12788.64 crore, while in the debt segment, the gross purchase was of Rs 736.71 crore with gross sales of Rs 479.15 crore. Besides, in the hybrid segment, the gross buying was of Rs 19.94 crore against gross selling of Rs 21.03 crore.

The US markets ended mostly in red on Tuesday ahead of US jobs data and major companies' earnings reports later this week. Asian markets were trading in red in early deals on Wednesday following mostly negative cues from global markets overnight.  Indian equity markets ended lower after a volatile day of trade on Tuesday. Today, markets are likely to make negative start on weak cues from global markets. Traders may be cautious as ratings agency Fitch cut the US credit rating from AAA to AA+, citing expected fiscal deterioration over the next three years. Traders may also be concerned amid foreign fund outflows. According to the provisional data available on the NSE, foreign institutional investors (FII) sold shares worth net Rs 92.85 crore on August 1. However, some respite may come later in the day as Minister of State for Finance Pankaj Chaudhary said that the Central Government's debt was Rs 155.6 lakh crore as on March 31, 2023. It has reduced from 61.5 per cent of GDP in 2020-21 to 57.1 per cent of GDP in FY 2022-23.  Meanwhile, Union Minister for State (Home Affairs) Nityanand Rai said 15th Finance Commission has allocated a total corpus of Rs 1,28,122.40 crore to the State Disaster Response Force (SDRF) in all States for the Award Period (2021-22 to 2025-2026). Further, some support may come as goods and services tax (GST) revenue rose 11 per cent year-on-year in July to Rs 1.65 trillion. Monthly GST collection crossed the Rs 1.6 trillion mark for the fifth time, indicating vigorous economic activity and strict anti-evasion measures employed by both central and state governments. Traders may take note of report that the government has mobilised a gross amount of Rs 5.77 lakh crore by issuing dated securities in the current financial year up to July 31, 2023. It has raised a net amount of Rs 4.18 lakh crore through the instrument in the same period.  There may be some buzz in online gaming companies related stocks as the GST Council in its meeting on Wednesday is likely to finalise the modalities for determination of supply value in online gaming and casinos for levying 28 per cent tax.

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

Nifty Top volumes

• Reliance Industries has signed a MoU with Brookfield Asset Management, to explore opportunities to manufacture renewable energy and decarbonization equipment in Australia.
•  Larsen & Toubro's construction arm -- L&T construction has won multiple orders for its Heavy Civil Infrastructure business vertical from prestigious clients.
•  State Bank of India has raised Rs 10,000 crore at a coupon rate of 7.54 per cent through its third infrastructure bond issuance.
•  NTPC's step-down subsidiary -- NTPC Renewable Energy has received a letter of award for a 550 megawatt solar project.