Indian equity benchmarks ended higher by over half a percent on Tuesday, powered by gains in Realty, Banking and Metal stocks. Markets made a positive start and stayed in green for whole day, as traders took encouragement after the Department of Expenditure, Ministry of Finance, Government of India, has approved capital investment proposals of Rs. 56,415 crore in 16 States in the current financial year. Capital investment projects in diverse sectors have been approved, including health, education, irrigation, water supply, power, roads, bridges, and railways. Some support also came in with a private report stating that India's current account balance likely turned positive in January-March, marking the first quarterly surplus in nearly two years thanks to a narrower trade deficit and an increase in services exports. Markets picked up momentum in the second half and got stronger towards the end of the trading session, as sentiments got boost after S&P Global Ratings raised its assessment of India's banking sector, citing a strong recovery underway in the Indian financial sector. The rating agency said that India's 'Banking Industry Country Risk Assessment', an indicator of an economy's financial sector, has been raised one notch to 5 from 6 earlier. Adding to the optimism, in an effort towards enhancing ethanol production capacities further with the vision to boost the agricultural economy and to reduce dependence on imported fossil fuel, the central government has extended timeline for disbursement of loan/completion of ethanol projects up to September 30, 2023. Finally, the BSE Sensex rose 446.03 points or 0.71% to 63,416.03 and the CNX Nifty was up by 126.20 points or 0.68% to 18,817.40.

The US markets ended sharply higher on Tuesday. The rally on markets partly reflected optimism the US economy will avoid a recession following the release of several upbeat reports. The Commerce Department released a report showing an unexpected surge in new orders for U.S. manufactured durable goods in the month of May. The report said durable goods orders shot up by 1.7 percent in May after jumping by an upwardly revised 1.2 percent in April. Street had expected durable goods orders to slump by 1.0 percent compared to the 1.1 percent advance that had been reported for the previous month. Excluding a surge in orders for transportation equipment, durable goods orders climbed by 0.6 percent in May after falling by a revised 0.6 percent in April. Ex-transportation orders were expected to edge down by 0.1 percent compared to the 0.2 percent dip that had been reported for the previous month. A separate Commerce Department unexpectedly showed a sharp increase in new home sales in the U.S. in the month of May. The report said new home sales soared 12.2 percent to an annual rate of 763,000 in May after surging 3.5 percent to a revised rate of 680,000 in April. Street had expected new home sales to slump 1.2 percent to an annual rate of 675,000 from the 683,000 originally reported for the previous month. With the unexpected spike, new home sales reached their highest level since hitting a rate of 773,000 in February 2022. Another report released by the Conference Board showed a significant improvement in U.S. consumer confidence in the month of June. The Conference Board said its consumer confidence index jumped to 109.7 in June from a revised 102.5 in May. Street had expected the index to rise to 103.7 from the 102.3 originally reported for the previous month.

Crude oil futures ended deeply in red on Tuesday on concerns about the outlook for fuel demand due to economic slowdown, and rising prospects of more interest rate hikes. European Central Bank (ECB) President Christine Lagarde reiterated that the central bank will continue to increase rates in July. Further, reports indicating possible excess supply in the market weighed as well on oil prices. Benchmark crude oil futures for August delivery fell $1.67 or about 2.4 percent to settle at $67.70 a barrel on the New York Mercantile Exchange. Brent crude for August delivery dropped $1.92 or 2.6 percent to settle at $72.26 a barrel on London's Intercontinental Exchange.

Indian rupee ended higher against the American currency on Tuesday amid a weak greenback in overseas markets and a rally in domestic equities. Traders got support after Reserve Bank of India data showed that India's current account deficit (CAD) narrowed to USD 1.3 billion or 0.2 per cent of GDP in the January-March quarter of FY23, mainly due to moderation in the trade deficit and a robust increase in services exports. India's CAD decreased to USD 1.3 billion (0.2 per cent of GDP) in Q4:2022-23 from USD 16.8 billion (2.0 per cent of GDP) in Q3:2022-231, and USD 13.4 billion (1.6 per cent of GDP) a year ago. On the global front, dollar rose to a seven-month high against the yen on Tuesday, with investors on the look-out for possible intervention by Japan to boost the ailing currency. Meanwhile, the euro picked up against the dollar as investors listened closely to policymakers' speeches at the European Central Bank's annual forum at Sintra in Portugal. Finally, the rupee ended at 82.03 (Provisional), higher by 1 paisa from its previous close of 82.04 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 7684.65 crore against gross selling of Rs 8033.98 crore, while in the debt segment, the gross purchase was of Rs 426.75 crore against gross selling of Rs 1221.44 crore. Besides, in the hybrid segment, the gross buying was of Rs 11.46 crore against gross selling of Rs 20.88 crore.

The US markets ended higher on Tuesday as upbeat economic data soothed investor worries about an imminent recession triggered by the Federal Reserve's aggressive interest rate hikes. Asian markets are trading mixed in early deals on Wednesday after China's industrial firms recorded a 18.8% tumble in cumulative profits in the first five months of 2023 from the year before.  Indian equity markets ended sharply higher on Tuesday powered by gains in heavyweight financial services and banking stocks. Today, markets are likely to make positive start on firm cues from US markets overnight and falling crude oil prices. Traders will be getting support as RBI in its latest data has said that India's current account deficit (CAD) narrowed to USD 1.3 billion or 0.2 per cent of GDP in the January-March quarter of FY23, mainly due to moderation in the trade deficit and a robust increase in services exports. It stated India's CAD decreased to USD 1.3 billion (0.2 per cent of GDP) in Q4:2022-23 from USD 16.8 billion (2.0 per cent of GDP) in Q3:2022-231, and USD 13.4 billion (1.6 per cent of GDP) a year ago. Sentiments may get boost as UK Minister for Investment Lord Dominic Johnson said an India-UK free trade agreement (FTA) is really important for both nations and it is for businesses on both sides to help drive that agenda. Johnson said he is very optimistic about an FTA even as he declined to put a timeframe to it. However, there may be some cautiousness in the markets later in the day as Reserve Bank of India's data showed net profit of the manufacturing, and the IT sector moderated in 2022-23. The net profit margin of the manufacturing sector declined to 8.7 per cent in 2022-23, against 10.6 per cent in 2021-22. There may be some buzz in road industry related stocks as Union Minister Nitin Gadkari said India's road network grew 59 per cent to become the second largest in the world as part of the development work carried out by the government in the last nine years. India's road network stood at 1,45,240 km today compared to 91,287 km in 2013-14. There will be some action in liquor industry related stocks as sales of Indian-made foreign liquor (IMFL) rose by 14 per cent in volume terms to 385 million cases in FY 2022-23 while premium products priced over Rs 1,000 per 750ml bottle grew by 48 per cent, according to industry body CIABC. Sales are almost 12 per cent higher than the pre-Covid levels of FY 2019-20, indicating that the impact of Covid has fully worn off.

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

Nifty Top volumes

• The merger between HDFC Bank and HDFC is expected to be completed by July 1. Both HDFC Bank and HDFC will have separate board meetings on June 30. 2023.
•  Tata Motors has achieved the 50K sales mark for India's bestselling EV, the Nexon EV.
•  Bajaj Finserv's subsidiary -- Bajaj Markets has partnered with leading financial institutions to provide credit cards that come with a number of offers and rewards.
•  Tech Mahindra's step down subsidiary -- LCC France SARL has approved a proposal to divest its 49% holding in SARL Djazatech along with its wholly owned subsidiary EURL LCCUK Algerie on June 25, 2023.