Indian equity benchmarks ended lower in the volatile session on Tuesday following tepid global mood and profit booking in IT and FMCG shares. Markets made a negative start and drifted lower during the initial hours of the trading session as traders got cautious with the provisional data from the NSE showing that foreign institutional investors (FIIs) net sold shares worth Rs 564.06 crore on March 4. Some concern also came with Paul Gruenwald, Global Chief Economist at S&P Global Ratings, stating that the global economic growth is likely to surprise on the upside and hence he sees only modest headwinds for India next fiscal. However, markets recovered during the second half of the session, as traders found support with data showing that India's services activity continued to expand in February, with the HSBC Purchasing Managers' Index (PMI) for the sector coming in at 60.6. At 60.6, the February services PMI is below the flash estimate of 62.0 released on February 22. It is, however, above the key level of 50, which separates expansion in activity from contraction, for the 31st month in a row. Some support also came with a private report that inflation may decline for two years in a row. As per the report, inflation is likely to fall to 4.3 per cent in the financial year 2024-25 from 5.4 per cent in the financial year 2023-24. Though markets failed to hold recovery and closed in the red. Traders took a note of the report released by the National Statistical Office (NSO) showing that India's unemployment rate dropped to 3.1 per cent in 2023 from 3.6 per cent in the preceding year, reflecting continued improvement in the labour markets. Finally, the BSE Sensex fell 195.16 points or 0.26% to 73,677.13 and the CNX Nifty was down by 49.30 points or 0.22% to 22,356.30.

The US markets ended lower on Tuesday with Nasdaq settling cut of over one and half percent. Uncertainty about the outlook for interest rates weighed on the markets ahead of congressional testimony by Federal Reserve Chair Jerome Powell. Powell is due to testify before the House Financial Services Committee on Wednesday and the Senate Banking Committee on Thursday. The Fed chief is likely to reiterate recent comments stressing the central bank needs greater confidence inflation is slowing before cutting interest rates. The next monetary policy meeting is scheduled for March 19-20, with the Fed widely expected to leave interest rates unchanged. On the economic data front, a report released by the Institute for Supply Management (ISM) showed U.S. service sector growth slowed by slightly more than expected in the month of February. The ISM said its services PMI fell to 52.6 in February after climbing to 53.4 in January. While a reading above 50 still indicates growth, street had expected the index to show a more modest decrease to 53.0. On the sectoral front, software stocks showed a substantial move to the downside on the day, resulting in a 3.4 percent nosedive by the Dow Jones U.S. Software Index down. Among software stocks, GitLab (GTLB) plummeted by 21.0 percent after the company reported better than expected fourth quarter results but provided disappointing guidance.

Crude oil futures ended lower on Tuesday on concerns about the outlook for demand from China amid disappointment over a lack of fresh supportive measures from the Beijing government. Further, weaker than expected U.S. factory orders data also raised concerns about energy demand. Meanwhile, traders now await weekly oil reports from the American Petroleum Institute (API) and U.S. Energy Information Administration (EIA). Benchmark crude oil futures for April delivery fell $0.59 or about 0.75% to settle at $78.15 a barrel on the New York Mercantile Exchange. Brent crude for May delivery was down by $0.79 or about 0.95% to $82.01 per barrel on London's Intercontinental Exchange.

Indian rupee ended flat on Tuesday amid negative trend in equity markets. Traders overlooked data showing that India's services activity continued to expand in February, with the HSBC Purchasing Managers' Index (PMI) for the sector coming in at 60.6. At 60.6, the February services PMI is below the flash estimate of 62.0 released on February 22. It is, however, above the key level of 50, which separates expansion in activity from contraction, for the 31st month in a row. On the global front, the dollar was steady against the yuan on Tuesday as markets digested policy statements out of China that were short on big stimulus measures, while a rebound in Tokyo inflation seemed to take Japan a step closer to the end of negative interest rates. Finally, the rupee ended flat with its previous close of 82.90 on Monday.

The FIIs as per Tuesday's data were net sellers in equity segment, while they were net buyers in debt segment. In equity segment, the gross buying was of Rs 13898.82 crore against gross selling of Rs 13910.85 crore, while in the debt segment, the gross purchase was of Rs 1018.99 crore with gross sales of Rs 441.63 crore. Besides, in the hybrid segment, the gross buying was of Rs 43.26 crore against gross selling of Rs 30.87 crore.

The US markets ended sharply lower on Tuesday as market participants eyed upcoming economic data and central bank actions. Asian markets are trading mixed on Wednesday tracking weakness in global markets. Indian markets snapped their four-day winning run and ended lower on Tuesday on mixed global cues and selling in information technology and FMCG names in a highly volatile session. Today, markets are likely to continue their previous session's weak trend with slightly negative start as global equities were on the back foot ahead of US Fed chair Jerome Powell's congressional testimony later in the day. Foreign fund outflows likely to dent sentiments. Foreign institutional investors (FIIs) net bought shares worth Rs 574.28 crore on March 5, provisional data from the NSE showed. There will be some cautiousness with Icra's report that amid continuing lower supplies, the borrowing cost for states fell to a 32-week low of 7.40 per cent Tuesday, down by 4 bps from the previous week's auctions. Throughout January, the interest rates were hovering at a two-year high of close to 7.9 per cent. Then rates started falling after states began to auction lower than earlier disclosed debt after the government cleared the Central share of tax devolution in early February. Meanwhile, External Affairs Minister S Jaishankar has called for a quick conclusion to the review of India's trade agreement with South Korea, adding that the two countries must work together to find more meeting points and increase their engagement to realise their potential. Banking stocks will be in focus as CareEdge Ratings said bad loans of banks in India have reached record lows due to recoveries from defaulters and regularisation of payments many-fold. However, banks are anticipating some stress and are looking at building buffers. The bad loans decreased by 21 per cent to Rs 4.85 lakh crore in the last calendar year, from the previous year. The ratio of gross bad loans is expected to improve to 2.8 per cent in 2021 from 2.9 per cent in 2020. Write-offs stood at Rs 34,000 crore as compared to Rs 29,000 crore in the December quarter of the previous year. There will be some buzz in the space stocks after the government notified the amended FDI norms in the space sector, clearing the deck for 100 per cent overseas investment in making components for satellites, 74 per cent in satellite manufacturing and operations, and 49 per cent in launch vehicles. Coal and power industry stocks will be in limelight with report that the Indian government has extended the mandate for the country's power producers to import 6% of their coal requirements until June, despite adequate domestic availability, amid transport constraints and higher electricity demand. There will be some reaction in real estate industry stocks with a private report that average home prices in India are set to rise 7% this year and next, driven by purchases of luxury properties.

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

Nifty Top volumes

• Tata Motors has received approval from board of directors for proposal to demerge the company into two separate listed entities.
• Tata Steel has received the first batch of deliveries of next-generation, green-fuel-powered commercial vehicles from Tata Motors.
• LTIMindtree's product division -- Fosfor has launched the Fosfor Decision Cloud.
• NTPC's wholly owned subsidiary -- NTPC Green Energy has signed a JV agreement with UPRVUNL for development of Renewable Power Parks and Projects in Uttar Pradesh.