Falling for the third straight day, Indian equity benchmarks ended volatile session marginally in red amid largely weak global markets as investors remained cautious ahead of the crucial Federal Reserve meeting outcome. Markets started the day on a negative note, as retail inflation stayed above the Reserve Bank's upper tolerance level of 6 per cent for the fifth month in a row, though it eased to 7.04 per cent in May from April's near-eight-year high of 7.79 percent, mainly on account of softening food and fuel prices as the government as well as the RBI stepped in to control spiralling price rise by way of duty cuts and repo rate hike. Traders were concerned with continued selling by foreign investors. Foreign institutional investors (FIIs) have net sold Rs 4,164.01 crore worth of shares on June 13, as per provisional data available on the NSE. However, key gauges erased early losses and traded marginally higher in morning deals, as traders found some support with India Exim Bank stating that the country's total merchandise exports are likely to be at $117.2 billion in the first quarter of FY23, as compared to the total merchandise exports of $95.5 billion in the corresponding quarter of the previous year. Some optimism also came as ICRA Ratings' report stated said that non-banking financial companies (NBFCs) and housing finance Companies (HFCs) witnessed an improvement in their asset quality in the fourth quarter of FY22 (Q4FY22) as the impact of the Omicron variant of Covid-19 was minimal and the slippage from the restructured book was lower.  But, key indices failed to hold gains and ended lower as India's wholesale price index (WPI) based inflation rate rose to the highest level in the current 2011-12 series at 15.88% in May 2022 as against 15.08% in April. The number has remained in double digits for the fourteenth consecutive month. The higher inflation can be attributed to a surge in vegetable prices and supply-side disruptions caused by the Russia-Ukraine war. Finally, the BSE Sensex fell 153.13 points or 0.29% to 52,693.57 and the CNX Nifty was down by 42.30 points or 0.27% to 15,732.10.

The US markets ended mostly in red on Tuesday with the S&P 500 dipping further into bear market territory ahead of the Federal Reserve's monetary policy announcement. The Fed, which is scheduled to announce its policy on Wednesday, is widely expected to hike interest rates by 50 basis points.  Some private reports said they expect that the Fed to raise interest rates by 75 basis points. Stocks hit session lows during the final hour of trading after seesawing between sharp gains and losses throughout the day. Stock specific developments, shares of Oracle jumped more than 10% after the software company reported an earnings beat boosted by a major increase in demand in its infrastructure cloud business. FedEx's stock saw its best day since 1986 after soaring 14% on news that the company would raise its quarterly dividend by more than 50% and add three new directors to its board. On the economic data front, the Labor Department showed producer prices increased 0.8 percent month-on-month in May 2022, following a 0.4 percent rise in April. The producer price index for final demand less foods and energy rose 0.5 percent from a month earlier in May of 2022, accelerating from a downwardly revised 0.2 percent gain in the prior month. Year-on-year, core producer prices rose by 8.3 percent, easing from a revised 8.6 percent increase in April. Annual producer inflation in the US edged slightly lower to 10.8 percent in May of 2022 from 10.9 percent in April and a 21-year high of 11.5 percent hit in March.

Crude oil futures ended deeply in red on Tuesday on rising dollar. The dollar index surged to 105.43 with traders betting on sharper interest rate cuts from the Federal Reserve. The Fed is widely expected to raise interest rate by 50 or 75 basis points. Meanwhile, cautiousness also prevailed on reports of a likely proposal to impose a federal surtax on certain oil companies to curb rising inflation. A sharp drop in natural gas prices amid reports that repairs to a damaged Freeport LNG terminal might not be on till later this year weighed as well on oil prices. Benchmark crude oil futures for July delivery fell $2.00 or 1.7 percent to settle at $118.93 a barrel on the New York Mercantile Exchange. Brent crude for August delivery dropped $2.22 or 1.81 percent to settle at $120.03 a barrel (provisional) on London's Intercontinental Exchange.

Indian rupee ended flat on Tuesday due to mild dollar demand from banks and importers. Lackluster domestic markets, elevated crude oil prices and persistent foreign capital outflows weighed on the local unit. Traders were worried as WPI based inflation rate rose to the highest level in the current 2011-12 series at 15.88% in May 2022 as against 15.08% in April. The number has remained in double digits for the fourteenth consecutive month. Meanwhile, India Exim Bank has said that the country's total merchandise exports are likely to be at $117.2 billion in the first quarter of FY23 (Q1FY23). The total merchandise exports stood at $95.5 billion in the corresponding quarter of the previous year. Finally, the rupee ended unchanged from its previous close of 78.04 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 3956.85 crore against gross selling of Rs 7522.93 crore, while in the debt segment, the gross purchase was of Rs 67.30 crore against gross selling of Rs 397.41 crore. Besides, in the hybrid segment, the gross buying was of Rs 23.43 crore against gross selling of Rs 28.77 crore.

The US markets ended mostly in red on Tuesday a day after tumbling into a bear market on worries that high inflation will push central banks to clamp the brakes too hard on the economy. Asian markets are trading mostly higher on Wednesday ahead of a key US Federal Reserve decision and with expectations rising for an even tougher rate hike than previously telegraphed. Indian markets finished yet another volatile session on Tuesday in the red, hitting fresh 11-month closing lows amid negative global cues. Today, markets are likely to make cautious start amid mixed moves across global markets, as investors awaited the outcome of a key policy meeting of the Fed. There will be some cautiousness as foreign portfolio investors (FPIs) turned sellers of domestic stocks to the tune of Rs 4,502.25 crore on June 14, data available with NSE suggested. However, some support will come as Chief Economic Adviser (CEA) V Anantha Nageswaran said India would become a $5 trillion economy by 2026-27 and $10 trillion by 2033-34. Nageswaran said India is relatively better placed than other emerging economies. Meanwhile, Fitch Ratings said the Reserve Bank is likely to raise interest rates further to 5.9 per cent by December 2022, on deteriorating inflation outlook. Fitch said India's economy faces a worsening external environment, elevated commodity prices, and tighter global monetary policy. There will be some buzz in the oil & gas sector stocks as S&P Global Commodity Insights in a note said India's oil product demand in May was up 860,000 barrels per day or 22 per cent year-on-year from a low base in 2021. Insurance industry stocks will be in focus as regulator Irdai reduced the solvency margin requirement for general insurers providing crop insurance, a decision expected to unlock Rs 1,400 crore of funds for them to undertake more business. There will be some reaction in edible oil industry stocks as Solvent Extractors Association (SEA) said India's palm oil imports declined by 33.20 per cent to Rs 5,14,022 tonne during May this year, but there was sharp rise in shipment of RBD palmolein oil by refineries. NBFCs stocks will be in limelight as Crisil Ratings said the hardening of interest rates is likely to raise the cost of funds for finance companies by 85-105 basis points (bps) as their debt, amounting to Rs 18 trillion, gets repriced in the current financial year.

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

Nifty Top volumes

• Bharti Airtel has unveiled India's first multiplex on the Partynite Metaverse platform. 
• Infosys has collaborated with Harvard Business Publishing to empower India's next generation, through Infosys Springboard, with critical digital and life skills made available free of cost. 
• HDFC Bank has entered into MoU with a leading early-stage venture capital firm, 100X.VC to support start-ups. 
• Cipla and not-for-profit Drugs for Neglected Diseases initiative have launched child-friendly 4-in-1 antiretroviral treatment for young children living with HIV in South Africa.