After 4-day winning run, stock market bulls took a breather on Tuesday with benchmark indices ending flat, erasing all of the morning gains. Key indices staged a gap up opening, as better-than-expected GDP numbers supported the market sentiments. Amid the coronavirus pandemic, India's GDP grew at 1.6% in the January-March quarter of the fiscal year 2020-21, higher than the street forecast, but witnessed a contraction of 7.3% for the entire fiscal year. Even then, the figure beat the CSO's estimate of 8% contraction. Some optimism also came with Chief Economic Adviser K V Subramanian's statement that the overall impact of the second wave of Covid-19 on the country's economy is not likely to be large but cautioned about an uncertainty surrounding the pandemic going ahead. Besides, the output of eight core sectors jumped by 56.1% mainly due to low base effect and uptick in production of natural gas, refinery products, steel, cement and electricity. However, owing to selling pressure in metal, basic materials and banking shares at higher levels on account of profit-booking led to correction in the markets. Sentiments got hit, after India's manufacturing sector activity witnessed a significant loss of growth momentum in May due to the intensification of the COVID-19 crisis and its detrimental impact on demand. The seasonally adjusted IHS Markit India Manufacturing Purchasing Managers' Index (PMI), fell to 50.8 in May, down from 55.5 in April, as companies observed the slowest rises in new work and output in ten months amid the intensification of the COVID-19 crisis. Traders remained cautious with a FICCI's Business Confidence Survey stating that the business sentiment in the country has been deeply impacted due to the second wave of coronavirus infections. It said that the overall business confidence index has nosedived and stood at 51.5 in the current round after reporting a decadal high value of 74.2 in the previous survey round. Some concern also came as the Organisation for Economic Co-operation and Development (OECD) cut its growth projection for India for FY22 to 9.9 per cent from 12.6 per cent estimated in March, as the second wave of coronavirus infections has paused economic recovery in Asia's third largest economy. Finally, the BSE Sensex fell 2.56 points to 51,934.88, while the CNX Nifty was down by 7.95 points or 0.05% to 15,574.85.

The US markets ended mostly lower on Tuesday as traders continued to express uncertainty about inflation and the outlook for monetary policy. Markets moved sharply higher at the start of trading on Tuesday but failed to sustain the upward move and spent the rest of the day showing a lack of direction. The initial strength on Wall Street came as upbeat manufacturing data from overseas added to optimism about the outlook for the global economy. Data showed Chinese manufacturing activity expanded at a faster pace in the month of May, while Eurozone manufacturing activity expanded at a record pace in May despite supple bottlenecks. The Institute for Supply Management (ISM) released a report showing manufacturing activity in the US expanded at a slightly faster pace in May. The ISM said its manufacturing PMI inched up to 61.2 in May from 60.7 in April, with a reading above 50 indicating growth in the manufacturing sector. The uptick surprised participants, who had expected the index to come in unchanged.on the sectoral front, Steel stocks saw significant strength following the upbeat manufacturing data, with the NYSE Arca Steel Index surging up by 3.6 percent. Computer hardware, airline and commercial real estate stocks also turned in strong performances on the day, while pharmaceutical stocks showed a notable move to the downside.

Crude oil futures ended higher with gain of over two percent on Tuesday amid optimism about a strong global economic recovery and increased demand for oil as the US and Europe relax restrictions and reopen businesses following a drop in fresh coronavirus cases and an acceleration in the vaccination drive. Oil prices were buoyed by reports that the Organization of the Petroleum Exporting Countries (OPEC) and their allies have agreed to continue a slow easing of supply curbs. Crude oil futures for July surged $1.40 or 2.1 percent to settle at $67.72 barrel on the New York Mercantile Exchange. August Brent crude rose 1.20 or 1.73 percent to settle at 70.52 a barrel on London's Intercontinental Exchange.

Continuing previous session drubbing, Indian rupee ended weaker against dollar on Tuesday on emergence of demand for the greenback from importers. Sentiments were fragile as Indian manufacturing activity eased in the month of May, showing a significant loss of growth momentum. Due to the intensification of the COVID-19 crisis and its detrimental impact on demand, companies observed the slowest rises in new work and output for ten months. On the global front, pound edged lower on Tuesday after touching a fresh three-year high versus the dollar amid expectations for a recovery in the British economy following a successful vaccination programme. Finally, the rupee ended 72.90, weaker by 28 paise from its previous close of 72.62 on Monday.

The FIIs as per Tuesday's data were net buyer in equity segment, while net seller in debt segment. In equity segment, the gross buying was of Rs 11104.80 crore against gross selling of Rs 5941.44 crore, while in the debt segment, the gross purchase was of Rs 552.84 crore against gross selling of Rs 1087.46 crore. Besides, in the hybrid segment, the gross buying was of Rs 9.74 crore against gross selling of Rs 41.49 crore.

The US markets ended mostly lower on Tuesday with declines in healthcare and tech shares. Asian markets are trading mixed on Wednesday with official data showing higher-than-expected growth in Australia's economy for the first quarter. Indian markets snapped their gaining streak to end flat with a negative bias on Tuesday after its manufacturing PMI fell to an 8-month low, offsetting better-than-expected GDP numbers. Today, the markets are likely to make cautious start amid mixed global cues. Investors will track the RBI's 3-day monetary policy meeting that begins later in the day, amid expectations that inflation and growth concerns could see the monetary policy committee (MPC) maintain an accommodative stance. Traders will be concerned with report that the second Covid wave has led to a sudden spike in India's unemployment rate - it rose to 11.9% in May from 7.97% in the previous month. The rate had last reached double digits in June last year, when it was 10.18%. According to the Centre for Monitoring Indian Economy (CMIE) data, barring April, May and June last year, the monthly unemployment had never breached the double-digit mark at least since January, 2016. There will be some cautiousness as India reported 133,228 fresh Covid-19 infections, taking the caseload to 28,306,883. With 3,205 new fatalities, the death toll is now at 335,114, Worldometer showed. India continues to be the second worst-hit nation. Also, Moody's Investors Service pegged India's GDP growth at 9.3 percent in the current fiscal ending March 2022 and 7.9 percent in FY23. The reimposition of lockdown measures along with behavioural changes on fear of contagion will curb economic activity, it said, adding that it does not expect the impact to be as severe as during the first wave. There will be some buzz in automobile industry stocks as the government proposed exempting battery-operated vehicles from the requirement of fee payment for registration certificates. In this regard, the Ministry of Road Transport and Highways has issued a draft notification proposing the exemption for Battery-Operated Vehicles (BOVs). NBFCs and HFCs stocks will be in focus with ICRA's report that restrictions in movements imposed by various states are likely to impact collections of non-banking financial companies (NBFCs) and housing finance companies (HFCs), which may see NPAs rising to 4.5 - 5 per cent by March 2022. There will be some reaction in aviation stocks with a private report that airlines are slashing salaries and re-negotiating vendor contracts as drastic fall in passengers has hurt revenue. Power stocks will be in limelight as power ministry data showed that power consumption in the country witnessed an 8.2 per cent year-on-year growth in May at 110.47 billion units (BU), indicating slow recovery in commercial and industrial demand of electricity.

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

Nifty Top volumes

• Infosys and the French Tennis Federation have unveiled new technologies to help bridge the gap between remote fans and the game, transforming the Roland -Garros experience for the entire tennis ecosystem. 
• Maruti Suzuki India has posted total sales of 46,555 units in May 2021. 
• M&M's Farm Equipment Sector has reported its tractor sales numbers for May 2021, which indicates a clear growth path in the upcoming season. 
• Bharti Airtel has upgraded its mobile network in North East to deliver the best network experience for its customers.