Indian equity benchmarks staged a strong recovery in the dying hours of trade to end comfortably in the green on Tuesday, on account of buying in Realty, Metal, Basic Materials and IT stocks. Key gauges traded on a volatile note for the first half of the trading session, as traders remained wary with ICRA Ratings' report that with the benefits of unlocking measures tapering out, the performance of the high-frequency indicators have become uneven since August 2021 especially when compared to the pre-COVID levels. It appears that the temporary boost, provided by the easing of state-wise restrictions after the second wave of COVID-19 ebbed, petered out. Traders also took a note of RBI Deputy Governor M Rajeshwar Rao's statement that there is a need to mainstream green finance and devise ways for incorporating environment impact into commercial lending decisions. He said addressing climate risk in the financial sector should be the joint responsibility of stakeholders as it would affect the resilience of the financial system in the long run. However, benchmark indices stabilized in the late afternoon trade, logging a smart rebound post two-days of selling, buoyed by a recovery in overseas markets.  Traders found some support with private report stating that investors have been pouring money into India's stock market, and it could grow to more than $5 trillion to become the fifth largest in the world within three years. It added Indian start-ups have raised $10 billion through IPOs so far this year - more money than was raised in the last three years. Some solace also came with Apex exporters' body Federation of Indian Export Organisations (FIEO) said it will focus on new products and markets for diversification with a view to boosting the country's outbound shipments. Adding to the optimism, Retirement fund body, Employees' Provident Fund Organisation (EPFO) in its latest Provisional Estimate of Net Payroll data report has showed that India created 1464782 new jobs in the month of July 2021. Sector wise, sugar sector remains in focused, as the Centre has so far cleared Rs 1,800 crore in subsidy to sugar mills for undertaking a mandated export of 6 million tonnes of the sweetener in the 2020-21 season-ending this month. Finally, the BSE Sensex rose 514.34 points or 0.88% to 59,005.27 and the CNX Nifty was up by 165.10 points or 0.95% to 17,562.00.

The US markets ended mostly lower on Tuesday following the sell-off seen during trading on Monday. The choppy trading on markets came as traders looked ahead to the Federal Reserve's monetary policy announcement on Wednesday. The Fed is widely expected to leave monetary policy unchanged but could address the outlook for its asset purchase program. The minutes of the Fed's last meeting signaled the central bank was prepared to begin scaling back asset purchases by the end of the year. On the economic data front, new residential construction in the US increased by more than expected in the month of August, according to a report released by the Commerce Department. The report said housing starts jumped by 3.9 percent to an annual rate of 1.615 million in August from a revised rate of 1.554 million in July. Street had expected housing starts to increase to a rate of 1.580 million from the 1.534 million originally reported for the previous month. The Commerce Department also said building permits spiked by 6.0 percent to an annual rate of 1.728 million in August from a revised rate of 1.630 million in July.

Crude oil futures ended higher on Tuesday as the Organization of the Petroleum Exporting Countries and its allies including Russia (OPEC+) struggled to pump enough oil in August to meet current consumption as the world recovers from the coronavirus pandemic. Several countries appeared to have produced less than expected as part of the OPEC+ agreement - suggesting a supply gap could grow. Further, Data showing a slow recovery of US oil output in the Gulf of Mexico, which faced disruptions due to Hurricane Ida recently, supported oil prices. Benchmark Crude oil futures October delivery rose $0.27 or 0.4 percent to settle at $70.56 barrel on the New York Mercantile Exchange. Brent crude for November delivery gained $0.35 or 0.5 percent to settle at $70.49 a barrel on London's Intercontinental Exchange.  

Indian rupee ended significantly higher on Tuesday on account of weak dollar demand from importers and banks. Sentiment got boost with private report stating that investors have been pouring money into India's stock market, and it could grow to more than $5 trillion to become the fifth largest in the world within three years. Meanwhile, Reserve Bank of India (RBI) in its latest survey has showed that exports of software services, including services delivered by foreign affiliates of Indian companies, recorded 2.1 per cent growth during 2020-21 and stood at $148.3 billion. On the global font; sterling held near four-week lows on Tuesday as investors evaluated the direction the Bank of England would take at an upcoming policy meeting. Finally, the rupee ended 73.61, stronger by 13 paise from its previous close of 73.74 on Monday.

The FIIs as per Tuesday's data were net buyer in both equity and debt segment. In equity segment, the gross buying was of Rs 7794.27 crore against gross selling of Rs 7714.88 crore, while in the debt segment, the gross purchase was of Rs 1322.21 crore against gross selling of Rs 676.48 crore. Besides, in the hybrid segment, the gross buying was of Rs 32.90 crore against gross selling of Rs 129.07 crore.

The US markets ended mostly lower on Tuesday after a broad sell-off the day before, with worries over troubles at developer China Evergrande and caution ahead of Wednesday's Federal Reserve policy news keeping a lid on the market. Asian markets are trading mixed on Wednesday amid lingering nerves about the fallout from a looming failure at developer China Evergrande and anticipation the Federal Reserve may move a step closer to tapering. Indian markets ended higher on Tuesday, to recoup most of the losses in the past two days, led by sharp gains in realty, metals and IT stocks. Today, the start of session is likely to be negative following a weak trend in the global peers. Traders will be concerned as the Organisation for Economic Co-operation and Development (OECD) cut its projection of India's economic growth by 0.2 percentage points to 9.7 per cent for the current financial year. Some pessimism may come as India recorded a spike of 27,333 new Covid-19 cases in the past 24 hours. The country also witnessed 385 deaths, taking the death toll to 445,801. There will be some cautiousness with a private report that retail depositors are earning negative returns on their bank deposits and hence, there is a need for reviewing taxes on interest earned. However, some support may come with report that foreign institutional investors have been bullish on Indian shares for much of 2021 so far, net offloading only in April, May and July. As of Monday, FIIs have invested a net Rs 64,202 crore in Indian equities so far this year. That is more than double the net purchases of Rs 28,347 crore in the first nine months of 2020. Traders may take note of report that as some taxpayers faced difficulties in filing GST return, the tax department has said the IT grievance redressal committee would consider giving interest and late fee waiver. There will be some buzz in the agriculture industry stocks as the agriculture ministry said India's foodgrain production is likely to touch record 150.50 million tonne in the ongoing kharif season on better rice output amid good monsoon. Telecom stocks will be in focus as the government is actively considering allowing adjusted gross revenue (AGR) moratorium through legislation. In September 2020, the Supreme Court in a judgment had said that the amount payable needed to be coughed up in 10 instalments ending 2031. There will be some reaction in power stocks with report that India has added 521 MW of rooftop solar capacity in April-June this year, which is the highest capacity installed in a quarter. Meanwhile, Puranik Builders has filed preliminary papers with capital markets regulator SEBI launch an initial public offering (IPO). The issue comprises fresh issue of shares worth Rs 510 crore and an offer for sale (OFS) up to 9.45lakh equity shares by the company's promoters group.

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

Nifty Top volumes

• HCL Technologies has entered into a five-year, digital transformation deal with MKS Instruments Inc.  
• L&T's wholly owned subsidiary - L&T Hydrocarbon Engineering has bagged two orders in the Construction Services segment. 
• Coal India's subsidiary -- Bharat Coking Coal has signed a revenue sharing contract worth nearly Rs 1,880 crore for commercial extraction of coal bed methane with Prabha Energy. 
• Tata Motors has decided to increase the price of its commercial vehicle range in effect from October 1, 2021.