Key benchmark indices managed to end with notable gains on Tuesday tracking a rise in their Asian peers as hopes of a China stimulus package boosted risk appetite. Markets made an optimistic start as sentiments got a boost after India's direct tax collection soared 16 per cent to touch Rs. 4.75 trillion this financial year, showing continuity in revenue growth despite external headwinds. Finance Ministry said the collection has gathered pace over past months, with net direct tax collection, net of refunds, growing 15.87 per cent to Rs. 4.75 trillion by July 9, higher than the net collections for the corresponding period of last year. Some support also came with a private report stating that a host of factors like a rising population, progress in innovation and technology, higher capital investments and rising labour productivity could potentially make India the world's second largest economy by 2075. Markets extended gains in late morning deals, as sentiments remained positive amid reports that strong inflow in new fund offers (NFOs) and consistent SIP flow helped equity mutual funds attract Rs 8,637 crore in June, which is the highest level in three months. Some optimism also came as a private report stated that India has overtaken China as the most attractive emerging market for investing, according to 85 sovereign wealth funds and 57 central banks representing $21 trillion in assets.  However, frontline indices pared some of their gains towards the close, on account of selling pressure in Metal and Banking shares ahead of the key inflation numbers tomorrow.  Some concern came with a private report stating that India's headline retail inflation likely rose in June for the first time in five months on the back of higher vegetable prices and a fading favourable base. Finally, the BSE Sensex rose 273.67 points or 0.42% to 65,617.84 and the CNX Nifty was up by 83.50 points or 0.43% to 19,439.40.

The US markets ended higher on Tuesday helped by optimism ahead of key inflation reports and as JPMorgan and other financial shares gained before earnings later this week. Consumer prices are expected to increase by 0.3 percent in June after inching up by 0.1 percent in May, while core consumer prices, which exclude food and energy prices, are expected to rise by 0.3 percent in June after climbing by 0.4 percent in May. The annual rate of growth by consumer prices is expected to slow to 3.1 percent June from 4.0 percent in May and the annual rate of core consumer price growth is expected to slip to 5.0 percent in June from 5.3 percent in May. The consumer price data is likely to have a significant impact on the outlook for interest rates ahead of the next Federal Reserve meeting later this month. Ahead of the inflation data, CME Group's FedWatch Tool is indicating a 92.4 percent chance of another quarter point rate hike at the next Fed meeting later this month. On the sectoral front, Energy stocks saw substantial strength on the day, benefiting from a sharp increase by the price of crude oil. With crude for August delivery surging $1.84 to $74.83 a barrel, the Philadelphia Oil Service Index spiked by 3.2 percent and the NYSE Arca Oil Index jumped by 2.2 percent. Significant strength was also visible among financial stocks, with the KBW Bank Index and the NYSE Arca Broker/Dealer Index both climbing by 1.7 percent. Tobacco, steel and natural gas stocks also saw considerable strength on the day, moving higher along with most of the other major sectors.

Crude oil futures ended sharply higher on Tuesday after the Energy Information Administration's (EIA's) forecast of a drop in oil production. The EIA has cut its forecast for U.S. oil production by 50,000 barrels per day this year following the OPEC+ extending output cuts through 2024. A weak dollar contributed as well to the rise in oil prices. The dollar dropped to a 2-month low after comments from several Fed officials suggested the U.S. central bank is nearing the end of its rate-hiking cycle. Benchmark crude oil futures for August delivery rose $1.84 or about 2.52 percent to settle at $74.83 a barrel on the New York Mercantile Exchange. Brent crude for September delivery surged $1.71 or 2.20 percent to settle at $79.40 a barrel on London's Intercontinental Exchange.

Indian rupee ended higher against the American currency on Tuesday, supported by a positive trend in equity markets and steady foreign fund inflows. Traders got encouragement as India's direct tax collection soared 16 per cent to touch Rs. 4.75 trillion this financial year, showing continuity in revenue growth despite external headwinds. On the global front, dollar weakened to a two-month low on Tuesday after Federal Reserve officials signalled that the central bank was nearing the end of its tightening cycle. Sterling rose to a 15-month high against the dollar on Tuesday after hot British labour data underscored market expectations of more interest rate rises from the Bank of England, and the greenback softened across the board. Finally, the rupee ended at 82.36 (Provisional), higher by 23 paise from its previous close of 82.59 on Monday.

The FIIs as per Tuesday's data were net buyers in equity segment, while net sellers in debt segment. In equity segment, the gross buying was of Rs 8488.14 crore against gross selling of Rs 7428.81 crore, while in the debt segment, the gross purchase was of Rs 840.67 crore against gross selling of Rs 1816.05 crore. Besides, in the hybrid segment, the gross buying was of Rs 4.00 crore against gross selling of Rs 15.43 crore.

The US markets ended higher on Tuesday helped by optimism ahead of key inflation reports and as JPMorgan and other financial shares gained before earnings later this week. Asian markets are trading mostly in green on Wednesday ahead of key inflation data out of the US later in the day. Indian markets ended higher on Tuesday, mirroring firm cues from global markets as well as led by gains in auto and IT shares. Index heavyweight Reliance too aided the up move. Today, markets are likely to get flat-to-positive start tracking overnight gains on Wall Street and taking cues from Asian counterparts. Investors await the official kickstart of the earnings season of India Inc for directional cues. TCS and HCL Tech will unveil their quarterly earnings later in the day. Investors will be looking ahead to the Industrial Production and Retail Inflation data to be out later in the day for more directional cues. Some support will come with foreign fund inflows. Provisional data from the National Stock Exchange (NSE) showed that foreign institutional investors (FII) bought shares worth Rs 1,197.38 crore on July 11. Meanwhile, RBI Deputy Governor T Rabi Sankar has said the RBI is aiming to increase the number of Central Bank Digital Currency (CBDC) to 10 lakh per day by the end of 2023. Though, there may be some cautiousness with a private report that spiraling prices of tomato, onion and pulses are emerging as new risks for India's retail inflation, reaffirming expectations of a hawkish hold from the central bank for the rest of the year. After moderating for four months, consumer price inflation probably accelerated to 4.6% in June. There will be some buzz in the auto stocks with private report that domestic automobile industry is expected to log a 17 per cent year-on-year revenue growth in the June quarter of FY24. Shares of online gaming firms will be in focus as the all-powerful Goods and Services Tax (GST) Council approved the imposition of a uniform 28 per cent tax on full face value of bets involving online gaming, casinos and horse racing. This will bring them on a par with betting and gambling. There will be some reaction in print media related stocks as CRISIL said the revenue of print media is expected to jump 13 to 15 per cent this year on the back of higher spending on advertisement by corporates as well as the government due to upcoming elections.

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

Nifty Top volumes

• State Bank of India has proposed to participate in an IPO of National Securities Depositories by way of offer for sale of up to 2% equity stake held by the Bank in NSDL.  
• Larsen & Toubro's state-of-the-art Kattupalli Shipyard near Chennai has been undertaking voyage repairs of the Military Sealift Command vessels.  
• Dr. Reddy's Laboratories has selected Amazon Web Services as preferred cloud provider to help provide access to affordable and innovative medicines. 
• ONGC has become the first Central Public Sector Enterprise in India to get certified for Anti-Bribery Management System by an international accredited certification body, M/s InterCert USA.