Indian equity benchmarks continued upward momentum for the sixth consecutive session on Tuesday fuelled by strong Q4 earnings and favourable domestic macroeconomic data. Markets made a optimistic start and stayed in green for whole day as traders took encouragement with data showing that manufacturing activities in India accelerated further and touched a four-month high in April, boosted by robust new business growth and improving supply-chain conditions. The seasonally adjusted S&P Global India Manufacturing Purchasing Managers' Index (PMI) increased from 56.4 in March to 57.2 in April. Traders got support as GST collection grew by 12 per cent in April to Rs 1.87 lakh crore, the highest monthly mop-up since the rollout of the indirect tax regime. Some solace came as the International Monetary Fund (IMF) projected that India would be the fastest-growing economy in the world, despite confronting considerable challenges such as financial sector turmoil, inflationary pressures, effects of the Russia-Ukraine war, and the persistent impact of the Covid-19 pandemic over the past three years. Sentiments remained up-beat with NITI Aayog member Arvind Virmani's statement that the Indian economy will grow at around 6.5 per cent in the current fiscal, notwithstanding high oil prices and increased geopolitical tensions. Virmani further said that he does not see any impact of the US and European banking crisis on the Indian financial sector. Additional support came with Commerce Secretary Sunil Barthwal's statement that India's exports to the UAE are expected to rise by about 60 per cent to reach $50 billion by 2026-27 from $31.3 billion at present on the back of the free trade agreement between the countries. However, key indices trimmed some gains in late afternoon deals, as some concern came with data showing that the output of India's eight core sectors grew by 3.6 percent in March 2023, the slowest in the last five months. In the year-ago period, the core sectors had grown by 4.3 percent. The growth rate in March has halved as compared to the preceding month of February 2023, when it stood at 7.2 percent. The plunge in March was driven by a decline in the output of three key sectors - cement, electricity and crude oil. Finally, the BSE Sensex rose 242.27 points or 0.40% to 61,354.71 and the CNX Nifty was up by 82.65 points or 0.46% to 18,147.65.

The US markets ended in red with cut of over one percent on Tuesday as traders looked to cash in on recent strength in the markets ahead of the Federal Reserve's monetary policy announcement on Wednesday. With the Fed widely expected to raise interest rates by another 25 basis points, traders will pay close attention to the accompanying statement for clues about the outlook for rates. Further, concerns about lawmakers' struggles to reach an agreement on raising the U.S. debt ceiling also weighed on markets. U.S. Treasury Secretary Janet Yellen has warned the Treasury might run out of money to cover obligations as soon as June 1. On the sectoral front, energy stocks moved sharply lower on the day, with another steep drop by the price of crude oil weighing on the sector. After slumping $1.12 to $75.66 a barrel in the previous session, crude for June delivery plummeted $4 to $71.66 a barrel amid concerns about the outlook for demand. On the economic data front, the Commerce Department released a report showing new orders for U.S. manufactured goods increased by slightly more than expected in March. The Commerce Department said factory orders advanced by 0.9 percent in March after slumping by a revised 1.1 percent in February. Street had expected factory orders to climb by 0.8 percent compared to the 0.7 percent decrease originally reported for the previous month. A separate report released by the Labor Department showed job openings in the U.S. fell by more than expected in the month of March. The Labor Department said job openings decreased to 9.590 million in March from an upwardly revised 9.974 million in February. With the drop, job openings fell to their lowest level since April 2021.

Crude oil futures ended sharply lower on Tuesday as investors focused on economic worries and awaited Wednesday's Federal Reserve policy decision. The Fed is widely expected to raise interest rates by 25 basis points. Data showing a contraction in Chinese manufacturing activity in April raised concerns about the outlook for oil demand. Worries about a U.S. debt default, and a drop in U.S. factory output weighed as well on oil prices. Benchmark crude oil futures for June delivery fell $4 or 5.3 percent to settle at $71.66 a barrel on the New York Mercantile Exchange. Brent crude for July delivery dropped $3.99 or 5 percent to settle at $75.32 a barrel on London's Intercontinental Exchange. 

Indian rupee ended lower against the US dollar on Tuesday as investors preferred to stay on the sidelines ahead of the US Fed meeting outcome. Traders ignored report that India's manufacturing sector activity improved in the month of April, as factory orders and production rose at the strongest rates in 2023 so far, more jobs were created and companies stepped up input purchasing owing to stock-replenishment efforts. According to the report, the seasonally adjusted S&P Global India Manufacturing Purchasing Managers' Index (PMI) surged to 57.2 in April from 56.4 in March. On the global front, the pound fell on Tuesday, ignoring data highlighting a few bright spots in Britain's economy, as investors focused more closely on the outlook for UK rates relative to others, after the Reserve Bank of Australia delivered a surprise hike. Finally, the rupee ended at 81.88 (Provisional), depreciating by 6 paise from its previous close of 81.82 on Friday.

The FIIs as per Tuesday's data were net buyers in equity segment, while net sellers in debt segment. In equity segment, the gross buying was of Rs 16900.08 crore against gross selling of Rs 10431.24 crore, while in the debt segment, the gross purchase was of Rs 717.94 crore against gross selling of Rs 1001.41 crore. Besides, in the hybrid segment, the gross buying was of Rs 8.24 crore against gross selling of Rs 5.96 crore.

The US markets ended lower on Tuesday as traders' fears around contagion in the regional banking sector returned ahead of the Federal Reserve's rate decision. Asian markets are trading mostly in red on Wednesday tracking overnight losses on Wall Street. Indian markets ended higher on Tuesday due to buying in index heavyweights Infosys and Reliance Industries amid foreign fund inflows. Today, markets are likely to get negative start tracking losses in global markets on renewed fears of a banking crisis and ahead of US Fed's policy decision later in the day. Investors will be eyeing services PMI data to be out later in the day for more cues. Also, investors await more of financial results from India Inc for domestic cues, with Titan and Godrej Properties among others due to post their earnings later in the day. There will be some cautiousness with a private report that India's unemployment rate climbed to a four-month high, as there were more people joining the workforce compared to available jobs in Asia's third largest economy. Creating enough jobs for India's burgeoning population will remain a key challenge for Prime Minister Narendra Modi's government, especially as he looks to a third term in office in national elections due next summer. However, sustained foreign fund inflows likely to aid domestic sentiments. Foreign institutional investors (FII) bought shares worth Rs 1,997.35 crore on May 2, provisional data from the National Stock Exchange showed. Some support will come as data released by the Reserve Bank of India (RBI) showed that India's services exports shot up by a record 26.6 per cent in 2022-23 (FY23) to $322 billion, thus closing the gap with merchandise exports that grew only 6 per cent to $447 billion in the same period. Besides, there are reports that the Centre is expected to achieve the FY23 fiscal deficit target of 6.4% of gross domestic product (GDP) despite a downward revision in national income from the budgeted levels. Meanwhile, the Income Tax department will come out with draft rules within the next 8-10 days to specify the class of investors and norms of valuation of foreign investment in unlisted companies. The Finance Act, 2023, has amended Section 56(2)(viib) of the I-T Act, thereby bringing overseas investment in unlisted closely held companies, except DPIIT-recognised startups, under the tax net. Aviation industry stocks will be in focus as after Wadia-owned Go First filed for insolvency, driven by a cash crunch due to the grounding of nearly half its 57 aircraft. There will be some reaction in edible oil industry stocks as the Solvent Extractors' Association (SEA) of India (SEA), the industry body for the edible oil sector, advised its members to reduce retail prices in line with the falling prices of edible oils in the global market. Sugar stocks will be in limelight with a private report that cooperative sugar factories have written to Prime Minister Narendra Modi seeking to increase the minimum sale price (MSP) of sugar to improve their cash flows that would make clearing sugarcane dues to growers convenient.

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

Nifty Top volumes

• Coal India's coal production has increased by 7.7% to 57.6 million tonnes in April 2023 as against 53.5 million tonnes in April 2022. 
• Maruti Suzuki India has reported a 7 per cent increase in total wholesales at 1,60,529 units in April 2023. 
• NTPC has signed a Supplementary Joint Venture Agreement with Nuclear Power Corporation of India on May 1, 2023. 
• Bharti Airtel has entered into strategic partnership with Bridgepointe Technologies, a tech advisory firm that helps mid-market and enterprise companies bridge the gap between tech investments and business results.