Bulls made a strong comeback on Dalal Street as Indian equity markets snapped the two-day losing streak and ended higher with gains of over three percent on Tuesday, led by buying across the sectors amid easing Ukraine Russia-tensions. Report stated that some Russian troops in military districts adjacent to Ukraine are returning to their bases after completing drills, a move that could de-escalate frictions between Moscow and the West. Markets started trade on a positive note but soon pared some of their opening gains, as traders got anxious with data showing that retail inflation soared to a seven-month high of 6.01 per cent in January, breaching the upper tolerance level of the Reserve Bank, driven by rising prices certain food items. The inflation in the food basket was 5.43 per cent in January 2022 as against 4.05 per cent in the preceding month. But, key gauges regained traction in the afternoon session, taking support from report that in an effort to tame food inflation, the government has reduced import duty on lentils to nil for Australia and Canada origins and cut it to 22%, from 30%, for those originating in the US. Buying further crept in with a report stated that India and the UAE are likely to sign a free trade agreement (FTA) on February 18, under which both the countries could give duty-free access to a number of products from different sectors. Additional support also came after India's overall exports (Merchandise and Services combined) in January 2022 are estimated to be $61.41 billion, exhibiting a positive growth of 36.76 per cent over the same period last year and a positive growth of 38.90 per cent over January 2020. Traders also took note of report stated that the outstanding portfolio of the microfinance industry registered a 2 per cent quarter-and-quarter growth to around Rs 2,26,000 crore as of September 2021. The same stood at Rs 2,22,060 crore during the three months ended June 2021. Finally, the BSE Sensex rose 1736.21 points or 3.08% to 58,142.05 and the CNX Nifty was up by 509.65 points or 3.03% to 17,352.45.

The US markets ended higher on Tuesday after Russia appeared to be backing away from an immediate invasion of Ukraine, cooling geopolitical tensions that have knocked the stock market down the last three days. Russian Defense Ministry spokesman Igor Konashenkov said units from Russia's southern and western military districts, which border Ukraine, have already begun returning to their bases after completing combat training. On the sectoral front, airline stocks turned in some of the market's best performances on the day, with the NYSE Arca Airline Index soaring by 5.6 percent. The index ended the session at its best closing level in three months. Substantial strength was also visible among semiconductor stocks, as reflected by the 5.5 percent spike by the Philadelphia Semiconductor Index. Networking stocks also saw considerable strength on the day, resulting in a 3.9 percent surge by the NYSE Arca Networking Index. On the economic data front, Producer prices in the US jumped by much more than expected in the month of January, according to a report released by the Labor Department. The Labor Department said its producer price index for final demand surged up by 1.0 percent in January after rising by an upwardly revised 0.4 percent in December. Street had expected producer prices to increase by 0.5 percent compared to the 0.2 percent uptick originally reported for the previous month. Meanwhile, after reporting a slight decrease in regional manufacturing activity in the previous month, the Federal Reserve Bank of New York released a report showing a modest increase in activity in the month of February. The New York Fed said its general business conditions index rose to a positive 3.1 in February from a negative 0.7 in January.

Crude oil futures ended deeply in red on Tuesday as worries about supply disruptions eased amid the de-escalation of tensions between Russia and Ukraine. Russian Defense Ministry spokesman Igor Konashenkov said units from Russia's southern and western military districts, which border Ukraine, have already begun returning to their bases after completing combat training. The news has helped ease concerns about a Russian invasion of Ukraine and crude oil supply disruptions. Benchmark crude oil futures for March delivery dropped $3.39 or 3.6 percent to settle at $92.07 a barrel on the New York Mercantile Exchange. Brent crude for April delivery fell $3.31 or3.47 percent to settle at $93.17 a barrel on London's Intercontinental Exchange.

Snapping 5-day drubbing, Indian rupee appreciated significantly against dollar on Tuesday, tracking recovery in domestic equities and weakness of the American currency overseas. Sentiments were upbeat with report that India's merchandise exports rose 25.28 per cent to $34.50 billion in January 2022 as compared to $27.54 billion in January 2021, on account of healthy performance by sectors such as engineering, petroleum and gems and jewellery. Traders shrugged off report that retail inflation soared to a seven-month high of 6.01 per cent in January, breaching the upper tolerance level of the Reserve Bank, driven by rising prices certain food items. On the global front, euro rebounded on Tuesday, nearly erasing all of Monday's losses, after reports that some Russian troops in areas near Ukraine have started returning to their bases. Finally, the rupee ended at 75.32 (Provisional), stronger by 28 paise from its previous close of 75.60 on Monday.

The FIIs as per Tuesday's data were net sellers in equity segment, while net buyers in debt segment. In equity segment, the gross buying was of Rs 6266.22 crore against gross selling of Rs 9410.53 crore, while in the debt segment, the gross purchase was of Rs 744.47 crore against gross selling of Rs 427.69 crore. Besides, in the hybrid segment, the gross buying was of Rs 122.81 crore against gross selling of Rs 13.22 crore.

The US markets ended higher on Tuesday amid signs of de-escalating tensions along the Russia-Ukraine border. Asian markets are trading mostly in green on Wednesday as fears of a Russian invasion of the Ukraine dissipated after Moscow indicated it was returning some troops to base from exercises, delivering investors a measure of relief. Indian markets staged a stellar comeback on Tuesday, after suffering their worst losses in a year in the previous session, as bargain hunters piled into energy, finance and IT stocks amid signs of easing Russia-Ukraine tensions. Today, domestic indices are likely to make optimistic start tracking gains in US markets overnight and strong Asian markets. Some support will come as India's exports in January rose 25.28 per cent to $34.50 billion on account of healthy performance by sectors such as engineering, petroleum and gems and jewellery. Additionally, an SBI research report stated that India can add $20 billion to its Gross Domestic Product (GDP) if the country can reduce by 50 per cent the dependence on imports from China by leveraging the production linked incentive schemes. However, there will be some cautiousness as government data showed exports from special economic zones (SEZs) grew at a slower pace as compared to the growth of overall outbound shipments from the country during the first eight months of the current fiscal year. Traders may take note of a private report expects RBI to leave key policy rates unchanged throughout the first half of 2022, despite retail inflation rising to 6.01 per cent in January, and likely to remain elevated till April. Meanwhile, the World Bank has called on developing countries to improve the health of their financial sectors, warning that risks created by the COVID-19 pandemic had led to certain fragilities from what it called non-transparent debt. NBFCs sector stocks will be in focus as the Reserve Bank of India (RBI) has given finance companies extra time till September 30, 2022 to have systems ready to implement rule wherein bad loans can be upgraded as standard asset only when entire arrears of interest and principal are paid. In November 2021, RBI had given time till March 31, 2022 to implement the rule. Shares of the Manyavar-brand owned company to debut on the bourses today. The issue was subscribed 2.57 times, and the final issue price was fixed at Rs 866 per share.

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

Nifty Top volumes

• Reliance Industries' wholly-owned subsidiary -- Jio is all set to acquire about 17 per cent stake in SoftBank-backed Inmobi's Glance platform for $200 million (about Rs 1,500 crore). 
• Coal India has reported 47.74% rise in its consolidated net profit at Rs 4,556.54 crore for Q3FY22 as compared to Rs 3,084.10 crore for the same quarter in the previous year. 
• IndusInd Bank has been empanelled by the SFAC to facilitate digital collection and settlement services on e-NAM portal for the transactions between farmers and traders across the country. 
• Eicher Motors has reported 14.36% fall in its consolidated net profit at Rs 456.13 crore for Q3FY22 as compared to Rs 532.59 crore for the same quarter in the previous year.