Indian equity benchmarks recouped most of their losses to end flat with a negative bias on Monday, amid heavy selling in TECK, IT and Capital Goods stocks and weak trend in Asian markets. Key gauges made negative start and stayed weak for the better part of the day, as traders got anxious with a private report stating that India's headline retail inflation rate is expected to be 7 percent in June, largely unchanged from 7.04 percent in May, with a sharp pick-up in vegetable prices likely nullifying the impact of the decline in prices of other food items. Some pessimism came in as foreign investors continued to desert Indian equity markets and have pulled out over Rs 4,000 crore this month so far amid steady appreciation of the dollar and rising interest rates in the US. Weak trade continued over the Dalal Street in late afternoon session with private report stated that after three consecutive quarters of raising more than $10 billion, the total funding in the Indian startup ecosystem fell by 40 percent during Q2 CY22 to reach $6.8 billion. The decline can be attributed to a global slowdown, decrease in tech stock valuations, inflation and geopolitical instability. However, the domestic markets managed to pare most of losses in final hour of trade, taking support from RBI Governor Shaktikanta Das exuded confidence that the price situation will gradually improve in the second half of the current fiscal, and the central bank would continue to take monetary measures to anchor inflation with a view to achieving strong and sustainable growth. Traders also took a note of Prime Minister Narendra Modi's statement that real growth was not possible without inclusiveness as he listed out various measures taken by his government during the last eight years to ensure that benefits of growth reach all sections of the society. Finally, the BSE Sensex fell 86.61 points or 0.16% to 54,395.23 and the CNX Nifty was down by 4.60 points or 0.03% to 16,216.00.

The US markets settled in red on Monday with Nasdaq ending over two percent lower as some traders stuck to the sidelines amid a lack of major US economic data. Further, renewed Covid concerns contributed to the weakness on Wall Street, as Shanghai reported its first case of the highly infectious BA.5 omicron sub-variant, raising fears of more lockdowns. Macau also closed all its casinos for the first time in over two years on Monday after a coronavirus outbreak in the world's biggest gambling hub.  Besides, US equities fell as Wall Street braced for big company earnings reports slated for later in the week which could signal how inflation is impacting businesses. Meanwhile, the 2-year Treasury yield hovered above its 10-year counterpart, an inversion many see as a recession indicator. The 2-year rate on Monday traded at 3.07%, while the 10-year stood at 2.99%. On the sectoral front, oil service stocks showed a substantial move to the downside on the day, with the Philadelphia Oil Service Index plunging by 2.8 percent. The weakness among oil service stocks came as the price of crude oil for August delivery climbed well off its worst levels but still fell $0.70 to $104.09 a barrel. Significant weakness was also visible among airline stocks, as reflected by the 2.7 percent nosedive by the NYSE Arca Airline Index. Semiconductor stocks also saw considerable weakness on the day, dragging the Philadelphia Semiconductor Index down by 2.5 percent. Networking, steel and retail stocks also showed notable moves to the downside, moving lower along with most of the other major sectors.

Crude oil futures ended lower on Monday due to concerns about the outlook for energy demand amid a surge in coronavirus cases in China and fresh curbs imposed in some areas in the country. As per private report, several Chinese cities are adopting fresh Covid-19 curbs, with the commercial hub of Shanghai bracing for another mass testing campaign after detecting the highly transmissible BA.5 Omicron subvariant over the weekend. Besides, the dollar's jump amid expectations of sharp interest rate hikes also weighed on crude oil prices. Benchmark crude oil futures for August delivery fell $0.70 or 0.7 percent to settle at $104.90 a barrel on the New York Mercantile Exchange. Brent crude for September delivery added $0.08 or 0.07 percent to settle at $107.10 (Provisional) a barrel on London's Intercontinental Exchange.

The Indian rupee slumped to a new record low against the US dollar on Monday amid weakness in the equities markets. Sentiments were fragile as foreign investors continue to desert Indian equity markets and have pulled out over Rs 4,000 crore this month so far amid steady appreciation of the dollar and rising interest rates in the US. Traders also got anxious with a private report stating that India's headline retail inflation rate is expected to be 7 percent in June, largely unchanged from 7.04 percent in May, with a sharp pick-up in vegetable prices likely nullifying the impact of the decline in prices of other food items. On the global front, euro tumbled against dollar on Monday as the biggest single pipeline carrying Russian gas to Germany entered annual maintenance, with flows expected to stop for 10 days. Finally, the rupee ended at 79.45 (provisional), weaker by 19 paisa from its previous close of 79.26 on Friday.

The FIIs as per Monday's data were net buyers in equity segment, while net sellers in debt segment. In equity segment, the gross buying was of Rs 6353.60 crore against gross selling of Rs 6234.48 crore, while in the debt segment, the gross purchase was of Rs 110.69 crore against gross selling of Rs 120.83 crore. Besides, in the hybrid segment, the gross buying was of Rs 1.05 crore against gross selling of Rs 8.80 crore.

The US markets ended lower on Monday as a lack of catalysts left market participants warily embarking on a week back-end loaded with crucial inflation data and the unofficial beginning to second-quarter earnings season. Asian markets are trading mostly in red on Tuesday following a weak session on Wall Street. Indian markets ended three days of gains to close modestly in the red on Monday, weighed by bearish global cues and robust selling in IT counters following lackluster Q1 results from TCS. Today, markets are likely get gap-down opening amid weakness across global markets. Market participants will track the industrial growth for May and retail inflation figures for June to be out later in the day. There are expectation that India's retail inflation likely held steady in June, but well above the Reserve Bank of India's tolerance limit for a sixth month as lower fuel and cooking oil prices offset higher services and food costs. Investors will keep eye on rupee movement as rupee on Monday settled at a fresh low against the dollar as the greenback firmed up globally owing to fears of weak economic growth worldwide amid a worsening energy crisis in Europe. Traders will be concerned as Crisil Research said that India Inc is staring at the third consecutive quarter of a year-on-year drop in profit margins for the April-June 2022 period. It added that operating profit margins have likely fallen by 2-3 percentage points for the June quarter as compared to the year-ago period. There will be some cautiousness with report that private equity investments into domestic companies fell 17 per cent to $6.72 billion on an annual basis in the June quarter. However, some support may come with report that widespread monsoon rains over western, southern, central and eastern parts of the country in the last one week have pushed cumulative rainfall this season on Monday to 7% above the benchmark, which is considered as above normal level. Meanwhile, the regulator has formed two task forces to study issues the non-life insurance and life insurance industries face in reinsurance support. There will be buzz in banking stocks with report that bank credit offtake is expected to pick up following normalisation of economic activities aided by the government thrust on public expenditure in current fiscal year. There will be some reaction in oil marketing companies stocks with a private report that Indian Oil Corporation (IOC), Bharat Petroleum and Hindustan Petroleum may post a combined loss of Rs 10,700 crore in June quarter on selling petrol and diesel at rates below cost.

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

Nifty Top volumes

• Larsen & Toubro's construction arm -- L&T construction has been awarded contracts for its Buildings & Factories Business.
• Bharti Airtel's subsidiary -- Bharti Airtel International (Netherlands) B.V. has cleared dues worth $450 million (Rs 3,565 crore) by purchasing notes through a tender offer.
• NTPC has entered into business transfer agreement to transfer 15 renewable energy assets to NTPC Green Energy, a wholly owned subsidiary of the company. 
• Tata Motors' wholly owned subsidiary -- Jaguar Land Rover has commenced deliveries of the new Range Rover in the India.