Indian equities suffered weakness on Tuesday, with both the larger peers, Sensex and Nifty, closing the day below their psychological levels of 60,150 and 17,950, respectively, dragged down by Telecom, Banking and Financial Services stocks amid a weak trend in global markets. The indices made a weak start and remained sluggish throughout the day impacted by unabated foreign fund outflows. According to exchange data, foreign Institutional Investors (FIIs) offloaded shares worth Rs 203.13 crore on Monday. Key gauges extended fall in afternoon deals, as sentiments remained negative, amid a private report stating that the impact of COVID-19, combined with geopolitical turmoil, an economic crisis and natural disasters, has pushed social progress backwards. During the session, markets participants ignored a private report stating that India's retail inflation is likely to remain steady in December, staying within the Reserve Bank of India's comfort zone for a second month as a moderation in food price rises was partly offset by elevated core inflation. It said retail inflation is likely remained steady at 5.9% in December. Traders also overlooked Chief Economic Advisor (CEA) V Anantha Nageswaran's statement that the Indian economy will be $3 trillion by the end of the current 2022-23 fiscal and is expected to be $7 trillion in the next seven years. He also said that the calendar year 2023 began in the context of the continuing conflict between Russia and Ukraine, which will create geo-political and geo-economic uncertainties. Finally, the BSE Sensex fell 631.83 points or 1.04% to 60,115.48 and the CNX Nifty was down by 187.05 points or 1.03% to 17,914.15.

The US markets ended higher on Tuesday on account of buying by fund and retail investors. Sentiments were upbeat as optimism over cooling inflation pushed investors to beaten-up technology stocks. The markets have had a positive start to 2023 due to hopes that cooling inflation and a slowing economy may convince the Federal Reserve to ease off its markets-shaking hikes to interest rates. The Fed since early last year has been raising rates at a furious pace in hopes of getting the nation's painful inflation under control. However, market participants will watch consumer price index data coming Thursday and big bank earnings on Friday for any clues into the health of the economy or signals of how the Fed will move interest rates going forward. Street expect it to show U.S. inflation slowed further to 6.5% from 7.1% in November and from a peak of more than 9% in the summer. Meanwhile, San Francisco Fed president Mary Daly said she expects interest rates to rise beyond 5 percent this year. Atlanta Fed president Raphael Bostic also said interest rates need to be raised above 5 percent. Further, Fed Chair Powell emphasized the need for the central bank to be free of political influence while it tackles high inflation. Powell noted in a speech delivered to Sweden's Riksbank that stabilizing prices requires making tough decisions that can be unpopular politically.

Crude oil futures ended higher on Tuesday on expectations energy demand will pick up after China decided to reopen its economy. Meanwhile, U.S. government's forecast that global petroleum consumption will hit a record next year, helped as well. The U.S. Energy Information Administration (EIA) said in its Short-Term Energy Outlook that it expects global consumption of liquid fuels will reach 102.2 million barrels per day next year. Benchmark crude oil futures for February delivery rose $0.49 or 0.7 percent at $75.12 a barrel on the New York Mercantile Exchange. Brent crude for March delivery surged $0.52 or 0.66 percent at $80.21 a barrel (provisional) on London's Intercontinental Exchange.

Indian Rupee ended higher against the US dollar on Tuesday despite weak cues from domestic equities. Traders got encouragement with private report stating that India's retail inflation is likely to remain steady in December, staying within the Reserve Bank of India's comfort zone for a second month as a moderation in food price rises was partly offset by elevated core inflation. It said retail inflation is likely remained steady at 5.9% in December. Besides, Chief Economic Advisor (CEA) V Anantha Nageswaran said that the Indian economy will be $3 trillion by the end of the current 2022-23 fiscal and is expected to be $7 trillion in the next seven years. He also said that the calendar year 2023 began in the context of the continuing conflict between Russia and Ukraine, which will create geo-political and geo-economic uncertainties. On the global front, U.S. dollar languished near a seven-month low against other major currencies on Tuesday, as investors took heart that the Federal Reserve may be nearing the end of its rate-hike cycle and as China's reopening drove demand for riskier assets. Finally, the rupee ended at 81.78 (Provisional), stronger by 57 paise from its previous close of 82.35 on Monday.

The FIIs as per Tuesday's data were net buyers in both equity and debt segment. In equity segment, the gross buying was of Rs 8777.79 crore against gross selling of Rs 8720.38 crore, while in the debt segment, the gross purchase was of Rs 800.00 crore against gross selling of Rs 296.07 crore. Besides, in the hybrid segment, the gross buying was of Rs 2.44 crore against gross selling of Rs 9.44 crore.

The US markets ended higher on Tuesday, which were laden with ups and downs amid high volatility. Asian markets were trading mostly in green following a higher close on US markets. Indian equity markets ended lower with cut of over one percent on Tuesday on account selling in IT and TECK stocks. Today, markets are likely to make slightly positive start amid firm cues from global markets.  Traders may get some encouragement as Ministry of Commerce and Industry joint secretary M Balaji said the Economic Cooperation and Trade Agreement (ECTA) signed between India and Australia would provide immediate market access at zero duty accounting 96.4 per cent of India's exports in value terms to Australia.  He said the ECTA has the potential to double bilateral ties between the two countries to USD 50 billion over the next five years.  Traders may take note of private report that the central government is likely to further consolidate its fiscal deficit by 50 basis points (bps) to 5.9 per cent in FY24 from 6.4 per cent in FY23. However, there may be some cautiousness in the markets later in day as the World Bank slashed its 2023 growth forecasts to levels teetering on the brink of recession for many countries as the impact of central bank rate hikes intensifies, Russia's war in Ukraine continues, and the world's major economic engines sputter. The development lender said it expected global GDP growth of 1.7% in 2023, the slowest pace outside the 2009 and 2020 recessions since 1993. In its previous Global Economic Prospects report in June 2022, the bank had forecast 2023 global growth at 3.0%. Further, sentiments may also weak as a private report stating that private equity investments into domestic companies fell sharply year-on-year by 42 per cent to USD 23.3 billion in 2022, which is the lowest since 2019, when it was USD 15.8 billion. The numbers reflect the overall funding winter that the startup space in particular, and the overall foreign investments in general have been witnessing since the Ukraine war began last February. There will be some reaction in gem and jewellery stocks as GJEPC said the overall gem and jewellery exports in December declined 11.25 per cent to Rs 19,432.88 crores (USD 2,356.70 million) due to rising prices, affecting the cost of living and talks of a downturn in the US. During December 2021, the overall gems and jewellery exports stood at Rs 21,896.46 crores (USD 2,905.79 million). There may be some buzz in real estate related stocks as a private report said that Indian real estate got $5.2 billion of institutional investments across 47 deals in the calendar year 2022 (CY22), a time of geopolitical headwinds and inflationary pressures. Investments increased 19 per cent compared to 2021.

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

Nifty Top volumes

• Tata Motors Group global wholesales in Q3FY23, including Jaguar Land Rover, were at 3,22,556 nos., higher by 13%, as compared to Q3FY22.
•  Oil and Natural Gas Corporation's overseas arm -- ONGC Videsh has re-taken a 20 per cent stake in the Sakhalin-1 oil and gas fields in the Far East region of Russia.
•  Bharti Airtel has launched its cutting edge 5G services in Bhubaneswar, Cuttack and Rourkela.
•  Reliance Industries' subsidiary -- Reliance Jio Infocomm has launched Jio True 5G services in Assam, at an event held in Guwahati.