Indian equity markets ended in red for the second day in a row on Tuesday due to selling in Metal, Telecom and Utilities shares amid rising concerns over interest rate hikes by central banks. Markets made a slightly positive start as traders took some support with NITI Aayog CEO Parameswaran Iyer's statement that India's production-linked incentive (PLI) scheme has attracted investment worth over Rs 45,000 crore and has also created three lakh jobs. The Indian government launched the PLI scheme in 2020. Some support also came in on report that India and the European Union (EU) announced the formation of three working groups under the Trade and Technology Council that was set up to deepen strategic ties with the trade bloc.  However, key indices soon slipped into red in morning deals, as traders turned cautious with data available with the BSE showing that foreign portfolio investors were net sellers on Monday, offloading shares worth Rs 1,218.14 crore. Some concern also came amid a private report stating that India's weightage in MSCI's emerging-market benchmark has dropped after the brutal sell-off in Adani Group's stocks. India has been replaced in the second spot by Taiwan after a rally in the latter's market. Markets extended fall in afternoon deals, as sentiments remained down-beat with global rating agency Fitch Ratings' report stating that banks will face margin pressure next fiscal (FY24) as they increase the deposit rates to attract funds to support sustained high loan growth. It expects the domestic banking sector's average Net Interest Margins (NIMs) to slightly contract by about 10 basis points (bps) in FY24 to 3.45 per cent, following a 15 bps increase in FY23 to 3.55 per cent, in a base case scenario, but remain well above that during FY17-FY22 average of 3.1 per cent. But, markets managed to trim some losses towards the end of the session, taking support from S&P Global Ratings' statement that core inflation in India has been declining sequentially, and an elevated 6.25 per cent policy rate limits the need for further rate hikes. Finally, the BSE Sensex fell 220.86 points or 0.37% to 60,286.04 and the CNX Nifty was down by 43.10 points or 0.24% to 17,721.50.

The US markets ended higher on Tuesday following Federal Reserve Chair Jerome Powell's comments indicating inflation has started easing. Investors cheered Powell's comments on disinflation, hoping they indicated the central bank could continue slowing on its interest rate hike campaign. However, Powell said that the Fed could be forced to hike more aggressively, which could have briefly spooked investors. Microsoft shares gained nearly 4 percent. Boeing surged 3.8 percent, and Chevron climbed 2.6 percent. Walt Disney, Merck, Travelers Companies, Apple, Intel, Salesforce.com, JP Morgan Chase, American Express, Goldman Sachs and Walgreens Boots Alliance also posted impressive gains. Hertz climbed 7.5 percent, and DuPont shares surged 7.8 percent on stronger than expected results. On the economic data front, the Commerce Department released a report showing an increase in the size of the U.S. trade deficit in the month of December. The report said the trade deficit widened to $67.4 billion in December from a revised $61.0 billion in November. Street had expected the deficit to widen to $68.5 billion from the $61.5 billion originally reported for the previous month. The increase in the size of the trade deficit came as the value of imports jumped by 1.3 percent to $317.6 billion, while the value of exports fell by 0.9 percent to $250.2 billion.

Crude oil futures ended sharply higher on Tuesday on expectations of higher energy demand from China. The International Energy Agency (IEA) in its report said that China is likely to account for 50% of currently projected global oil demand growth in 2023. Meanwhile, The Organization of the Petroleum Exporting Countries (OPEC) is also optimistic about Chinese oil demand picking up this year. Besides, oil prices also rose on concerns about supply following a massive earthquake in Turkey on Monday. The massive earthquake that rocked Turkey on Monday forced a significant export facility in that country to shutdown. Benchmark crude oil futures for March delivery rose $3.02 or 4.1 percent at $77.14 a barrel on the New York Mercantile Exchange. Brent crude for April delivery surged $2.73 or 3.35 percent at $83.72 (Provisional) a barrel on London's Intercontinental Exchange.

Indian rupee trimmed some of its early gains but still ended higher against the American currency on Tuesday, on continued dollar selling by banks and exporters. Sentiments got support with NITI Aayog CEO Parameswaran Iyer's statement that India's production-linked incentive (PLI) scheme has attracted investment worth over Rs 45,000 crore and has also created three lakh jobs. The Indian government launched the PLI scheme in 2020. However, muted domestic equities, unabated foreign capital outflows and rising crude prices restricted the rupee's rise. Traders also remained on sidelines ahead of the Reserve Bank of India's monetary policy decision due Wednesday. On the global front, dollar eased on Tuesday after its rally the previous day, but still hovered near a one-month peak as traders raised their bets on how high the U.S. Federal Reserve would need to raise interest rates to tame inflation. Finally, the rupee ended at 82.70 (Provisional), stronger by 6 paise from its previous close of 82.76 on Monday.

The FIIs as per Tuesday's data were net sellers in both equity and debt segment. In equity segment, the gross buying was of Rs 7048.25 crore against gross selling of Rs 8086.74 crore, while in the debt segment, the gross purchase was of Rs 372.32 crore against gross selling of Rs 770.87 crore. Besides, in the hybrid segment, the gross buying was of Rs 2.00 crore against gross selling of Rs 27.30 crore.

The US ended higher on Tuesday as investors digested comments from Federal Reserve Chair Jerome Powell about how long the central bank might need to tame inflation. Asian markets are trading mixed on Wednesday, as Federal Reserve Chairman Jerome Powell overnight acknowledged that inflation is declining - a sign the central bank may soon pause its rate hikes. Indian markets struggled for direction and ended lower on Tuesday, as markets see-sawed between optimism that the Reserve Bank of India will pause rate hikes after Wednesday, and worries that the Fed was likely to keep upping rates for longer. Today, the markets are likely to positive start with the street awaiting the Reserve Bank of India's (RBI) policy outcome. The Reserve Bank of India (RBI) is widely expected to raise rates by a modest 25 basis points following a gradual decline in the CPI imprint for November and December to below 6 per cent. However, there may be some cautiousness as Foreign institutional investors (FII) sold shares worth Rs 2,559.96 crore on February 7, as per provisional data available on the NSE. Besides, Markets regulator SEBI has proposed an institutional mechanism that will require stock brokers to put in place systems for detection and prevention of market abuse. Cement industry stocks will be in focus as Finance Minister Nirmala Sitharaman indicated that the government could be open to considering a reduction in the goods and services tax (GST) on cement, a long-standing demand of the infrastructure sector, if the GST Council agrees. There will be some buzz in the banking sector stocks as rating agency Fitch said Indian banks' exposure to the Adani Group is not that large to present substantial risk to their standalone credit profiles. There will be some reaction in stocks related to EV as automobiles body FADA stated that electric passenger vehicles retail sales declined by 10.51 per cent sequentially to 3,346 units in January 2023 over 3,739 vehicles sold in December last year. Meanwhile, traders will be looking ahead to the earnings for more cues including Shree Cement, Adani Power, Adani Wilmar, Escorts Kubota, Equitas Small Finance Bank, GATI, Gujarat Pipavav Port, HG Infra Engineering, IRCON International, Minda Corporation, Oberoi Realty, Piramal Enterprises, Speciality Restaurants and Trent to report their results later in the day.

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

Nifty Top volumes

• Reliance Industries has showcased a truck that runs on hydrogen, the cleanest known fuel whose tail emissions are only water and oxygen, at the India Energy Week. 
• ONGC has recreated an offshore platform, which is employed to produce oil and gas from the high seas, at India's flagship energy event India Energy Week 2023, organized at Bengaluru international exhibition center.
• Bharti Airtel has launched cutting edge 5G services in Raipur and Durg-Bhilai.
• Bajaj Finserv's unlisted insurance subsidiary -- Bajaj Allianz Life Insurance Company has reported Individual non-single premium of Rs 408.81 crore (provisional) in the month of January 2023.