Indian equity benchmarks ended higher with gains of more than half percent on Tuesday, with Sensex and Nifty surpassing their crucial psychological levels of 52,750 and 15,800, respectively. The markets made a firm start to remain bullish throughout the session, as data released by the government showed that industrial production surged 29.3 per cent in May, mainly due to low-base effect and good performance by manufacturing, mining and power sectors, but remained below the pre-pandemic level. The manufacturing sector -- which constitutes 77.63 per cent of the Index of Industrial Production (IIP) -- grew 34.5 per cent in May this year. The mining sector output rose 23.3 per cent in May while power generation increased 7.5 per cent during the same month. Traders also found some support with a private report that the Indian economy is at the start of a virtuous cycle and on the path to becoming a $15 trillion economy over the next two decades. Markets extended gains in late afternoon trading paced by buying interest in Banking and Energy shares. Some optimism also came as India Ratings and Research's (Ind-Ra) report stated that loan collections on securitized portfolios, which had taken a hit because of the second wave of COVID-19 pandemic, are set to recover. It also said the collection efficiency on those loans had dropped to 69.2 per cent in May from 82.8 per cent in March. Some support also came with private report stated that business activity has climbed back to the pre-second wave levels with the seventh consecutive week of surge in levels as new coronavirus infection cases decrease. Traders overlooked the government data showed retail inflation remained above the RBI's comfort level for the second consecutive month despite slipping slightly to 6.26 per cent in June while the factory output recorded a growth of 29.3 per cent in May, mainly on account of the base effect. Finally, the BSE Sensex rose 397.04 points or 0.76% to 52,769.73, while the CNX Nifty was up by 119.75 points or 0.76% to 15,812.35.

The US markets ended lower on Tuesday as treasury yields rose after the Treasury Department revealed this month's auction of $24 billion worth of thirty-year bonds. The thirty-year bond auction drew a high yield of 2.000 percent and a bid-to-cover ratio of 2.19, while the ten previous thirty-year bond auctions had an average bid-to-cover ratio of 2.33. The bid-to-cover ratio is a measure of demand that indicates the amount of bids for each dollar worth of securities being sold. Weakness also prevailed in the markets after the Labor Department released a report showing consumer prices in the US saw the biggest monthly increase in thirteen years in the month of June. The Labor Department said its consumer price index jumped by 0.9 percent in June after climbing by 0.6 percent in May. Street had expected consumer prices to rise by 0.5 percent. The bigger than expected increase in consumer prices reflected the biggest advance since prices surged up by 1.0 percent in June of 2008. Excluding food and energy prices, core consumer prices still jumped by 0.9 percent in June following a 0.7 percent increase in May. Core prices were expected to rise by 0.4 percent.  The annual rate of consumer price growth accelerated to 5.4 percent in June from 5 percent in May, reaching the highest level since a matching spike in August of 2008. Core consumer prices were up by 4.5 percent year-over-year in June, reflecting an acceleration from the 3.8 percent jump in May. Core prices saw the biggest annual increase since November of 1991.

Crude oil futures ended higher on Tuesday as expectations of further declines in US crude inventories. US crude inventories were expected to fall for an eighth consecutive week, while gasoline stocks also declined. However, the upside remained capped by fears over the spread of the highly infectious Delta virus. The World Health Organization warned the delta variant was becoming dominant and many countries had yet to receive enough doses of vaccine to secure their health workers. Meanwhile, OPEC+ is yet to make progress closing divisions between Saudi Arabia and the United Arab Emirates that last week prevented a deal to raise oil output, making another policy meeting this week less likely. Crude oil futures for August rose 40 cents or 0.50 percent to settle at $74.50 barrel on the New York Mercantile Exchange. September Brent crude gained 43 cents or 0.6 percent to settle at $75.59 a barrel on London's Intercontinental Exchange.

Rupee ended higher for third straight session against US dollar on Tuesday on dollar selling by exporters and rally in Indian equities. Traders took solace as data released by the government showed that India's industrial production grew 29.3 per cent in May over the same period a year ago, as the impact of a favourable base continued for yet another month. However, upside remained capped amid cautions over data by government showing that India's retail inflation eased slightly to 6.26 per cent in June, but stayed above the Reserve Bank's tolerance range (2 per cent-6 per cent) for the second straight month. On the global front, sterling edged lower on Tuesday after the Bank of England scrapped pandemic-era curbs on dividend payments by banks but warned some asset prices look stretched. Finally, the rupee ended 74.49, stronger by 9 paise from its previous close of 74.58 on Monday.

The FIIs as per Tuesday's data were net seller in both equity and debt segment. In equity segment, the gross buying was of Rs 8793.48 crore against gross selling of Rs 9284.18 crore, while in the debt segment, the gross purchase was of Rs 227.82 crore against gross selling of Rs 738.84 crore. Besides, in the hybrid segment, the gross buying was of Rs 2.79 crore against gross selling of Rs 8.67 crore.

The US markets ended lower on Tuesday as the biggest hike in US inflation in 13 years rattled investors. Asian markets are trading mostly in red on Wednesday following a hotter-than-expected US inflation report for June overnight. Indian markets ended higher on Tuesday, following a rally in Asian peers, mainly boosted by banking and financials. Today, the start of session is likely to be in red amid weakness in the global markets. Investors are eyeing the WPI data to be out later in the day. Traders will be concerned with rising coronavirus cases in the country. India has recorded a spike of 40,215 fresh Covid-19 cases in the last 24 hours, taking the total caseload to 30,944,949, according to Worldometer. The death count increased to 411,439 with 623 new fatalities, the data showed. Besides, Lav Agarwal, joint secretary in the health ministry, said people talk about the third wave as a weather update but fail to understand that adherence to Covid-appropriate behaviour or the lack of it is what will prevent or cause any future waves. There will be some cautiousness with former RBI Governor Raghuram Rajan's statement that India needs foreign exchange buffer reserves to insulate itself from exchange rate volatility as we have no friends for swap lines and Japan was the only country that helped during the taper tantrum in 2013. However, some respite may come later in the day as the government exempted basic customs duty on imports of specified API/ excipients for Amphotericin B and raw materials for manufacturing Covid test kits. Some support may come with report that the government may extend the scheme for investment promotion 2017-20, with an aim to attract investors and promote economic growth of the country. Traders may take note of report that global rating agency Standard and Poor's has affirmed India's sovereign rating at BBB- and maintained a stable outlook on gradual recovery in the economy. It said India's recovery will gather pace through the second half of FY22 and into the following year, helping to stabilise the country's overall credit profile. Infrastructure industry stocks will be in focus as Union Road Transport and Highways Minister Nitin Gadkari said the construction of roads was faster than ever. There will be some reaction in power stocks as rating agency Icra said demand for electricity in India is expected to grow 6 per cent in 2021-22 as compared to the previous fiscal year. It has also estimated power generation capacity addition at 17- 18 GW for the ongoing fiscal year. Zomato's Rs 9,375-crore IPO, India's biggest this year, is set to open on Wednesday, 14 July 2021. The IPO will be open for subscription till July 16. There will be some important earnings announcements too to keep the markets buzzing.

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

Nifty Top volumes

• Reliance Industries has invested Rs 1 lakh in cash in 10,000 equity shares of Rs 10 each of RNESL, a newly incorporated wholly owned subsidiary. 
• Bharti Airtel has added 5,17,237 customers in April 2021. 
• NTPC's green energy arm -- NTPC REL has signed a MoU with the Union Territory of Ladakh to set up the country's first green Hydrogen Mobility project in the region. 
• M&M has launched new Bolero Neo.