Indian equity benchmarks extended their decline into second straight day and ended over half percent lower on Tuesday, as investors remained cautious ahead of crucial macroeconomic data announcements -- industrial production for February and inflation rate for March -- post trading hours. Key gauges made gap-down opening and stayed in red for whole day, as a private report stated that India's retail inflation likely sped up to a 16-month high of 6.35% in March, well above the Reserve Bank of India's upper tolerance band for a third straight month, in part due to a sustained rise in food prices. Sentiments remained down-beat with the research wing of rating agency Crisil in its latest report said that companies are not able to pass on the pressure from rising input costs to buyers, and this is likely to result in a compression in corporate profit margins for the March quarter (Q4FY22). It said operating profit margins for companies are set to fall by as much as 3 percentage points compared to the year-ago period, and up to 0.60 per cent as compared to the preceding December quarter. Domestic sentiments remained negative in afternoon deals, amid report stating that a sharp rise in prices of essential commodities over the past few months coupled with the latest burden of steep hike in fuel rates have made life difficult for almost every section of the society across the country, with people finding it hard to manage their household budget. Adding more worries among traders, the World Trade Organization projected that Russia's war in Ukraine could almost halve world trade growth this year and drag down global GDP growth too. Bourses managed to trim some of their losses in late afternoon deals, taking support from the Reserve Bank of India's (RBI) data showing that India Inc's direct overseas investment increased 8.5 per cent year-on-year to $3.34 billion in March 2022. The Indian companies had invested $3.1 billion in their overseas fully-owned subsidiaries (WOSs) and joint-ventures (JVs) in the same month a year ago. In the preceding month (February 2022), the outward foreign direct investment was $940.62 million. Some support also came with Union Minister for Petroleum and Natural Gas Hardeep Singh Puri's statement that India is on its way to become a global energy superpower in terms of consumption and production. Finally, the BSE Sensex fell 388.20 points or 0.66% to 58,576.37 and the CNX Nifty was down by 144.65 points or 0.82% to 17,530.30.

The US markets ended lower on Tuesday after an early morning bounce gave way to selling as investors weighed the latest US inflation data. Reflecting a spike in gasoline prices, the Labor Department released a report showing US consumer prices jumped in the month of March. The Labor Department said its consumer price index surged by 1.2 percent in March after climbing by 0.8 percent in February. The sharp increase in consumer prices matched street estimates. The jump in consumer prices came as gasoline prices skyrocketed by 18.3 percent, accounting for over half of the monthly increase. Food prices also shot up by 1.0 percent. The annual rate of consumer price growth accelerated to 8.5 percent in March from 7.9 percent in February, showing the fastest growth since December 1981. Core consumer prices were up 6.5 percent year-over-year in March, reflecting an uptick from the 6.4 percent jump in February. The annual growth represents the biggest increase since August 1982. Meanwhile, investors are also awaiting the start of earnings season set to kick off Wednesday with JPMorgan and Delta Air Lines, followed by several big banks on Thursday. On the sectoral front, banking stocks moved notably lower amid a pullback by treasury yields, dragging the KBW Bank Index down by 1.4 percent. Significant weakness was also visible among pharmaceutical stocks, as reflected by the 1.2 percent drop by the NYSE Arca Pharmaceutical Index.

Crude oil futures ended higher with gains of over six percent on Tuesday as Shanghai's relaxation of some COVID-19 restrictions eased concerns about Chinese demand. Shanghai said on Monday that more than 7,000 residential units had been classified as lower-risk areas after reporting no new infections for 14 days and districts have since been announcing which compounds can be opened up. Further, support also came in as the Organization of the Petroleum Exporting Countries (OPEC) warned that it would be impossible to replace 7 million barrels per day (bpd) of Russian oil and other liquids exports lost in the event of sanctions or voluntary actions. Benchmark crude oil futures for May delivery rose $6.31 or 6.7 percent to settle at $100.60 a barrel on the New York Mercantile Exchange. Brent crude for June delivery surged $6.10 or 6.2 percent to settle at $104.58 a barrel on London's Intercontinental Exchange.

Indian rupee ended lower against dollar on Tuesday. Sentiments were fragile as research wing of rating agency Crisil in its latest report said that companies are not able to pass on the pressure from rising input costs to buyers, and this is likely to result in a compression in corporate profit margins for the March quarter (Q4FY22). Adding more worries among traders, World Trade Organization projected that Russia's war in Ukraine could almost halve world trade growth this year and drag down global GDP growth too. On the global front, euro fell on Tuesday unable to hold on to the post-French election gains, as the dollar held firm supported by high U.S. yields ahead of inflation data expected to reinforce bets of aggressive monetary tightening. Finally, the rupee ended at 76.16 (Provisional), weaker by 25 paise from its previous close of 75.91 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 6341.43 crore against gross selling of Rs 7804.94 crore, while in the debt segment, the gross purchase was of Rs 395.66 crore against gross selling of Rs 710.69 crore. Besides, in the hybrid segment, the gross buying was of Rs 2.48 crore against gross selling of Rs 13.58 crore.

The US markets ended lower on Tuesday as investors factored in expectations of faster and aggressive rate hikes by the Fed on elevated inflation. Asian markets are trading mostly in green on Wednesday despite concerns about aggressive rate hikes. Indian markets extended losses to a second straight day on Tuesday, dragged by oil & gas, IT and metal shares though a rebound in financial shares in the final hours of trade lent some support. Today, the markets are likely to start the last session of a holiday-truncated trading week on flat-to-positive note following gains in Asian counterparts. Traders will be taking encouragement with the government data showing that the factory output rose 1.7 per cent in February, mainly on account of rise in the mining sector and power generation. The Index of Industrial Production (IIP) had declined 3.2 per cent in February 2021. Mining output rose 4.5 percent year-on-year in February and electricity was up by 4.5 percent. The manufacturing sector recorded a growth of 0.8 per cent. Some support will come with asserting that the economic situation is likely to improve during the year, Chief Economic Adviser V Anantha Nageswaran expressed hope that the private sector is expected to accelerate capital expenditure from the second half of the current fiscal. Besides, the Centre has completed asset monetisation worth Rs 96,000 crore during FY22, surpassing the target of Rs 88,000 crore. However, there may come some cautiousness as consumer price-based inflation jumped to 6.95 per cent in March, mainly on account of costlier food items. The Consumer Price Index (CPI) based inflation was 6.07 per cent in February. The inflation in the food basket was 7.68 per cent in March, up from 5.85 per cent in the preceding month. Textile industry stocks will be in focus as Union Minister Piyush Goyal pitched for taking the textiles exports of the country to $100 billion by 2030 as the sector is recording a healthy growth. There will be some reaction in real estate industry stocks with a private report that institutional investments in real estate jumped over two-fold to $1.1 billion (Rs 8,375 crore) in the three months ended March 2022 with the opening up of the economy after the third COVID wave. There will be some important earnings announcements too to keep the markets buzzing.

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

Nifty Top volumes

• Tata Motors has reported a 2% year-on-year increase at 3,34,884 units in group global wholesales, including Jaguar Land Rover, for the fourth quarter of FY22. 
• Coal India has scaled up its capex to Rs 14,834 crore ending FY22, the highest so far. 
• The Odisha Government and BPCL have signed a MoU to take vital steps towards the proliferation of green energy in the state.
• Infosys has opened its Melbourne Living Lab part of a network of over 20 established globally to date.