Indian equity benchmarks ended flat in volatile session on Tuesday, on profit booking ahead of the derivative expiry. Investors also awaited cues from the Union Budget due to be unveiled next week. Key gauges opened higher and managed to trade in green in first half, as traders got support with economic think-tank NCAER stating that business confidence has recovered from the lows of the pre-pandemic (2019-20) and the following two pandemic years. The NCAER-NSE Business Confidence Index (BCI) was higher at 126.6 in the third quarter of 2022-23 than the year-ago level of 124.4. Some optimism also came with Commerce and Industry Minister Piyush Goyal's statement that the country's services exports are doing extremely well and going by the current trend these outbound shipments would register about 20 per cent growth in this fiscal (FY23) and cross the $300 billion target despite global economic uncertainties. However, markets erased their initial gains in late afternoon deals and ended flat as traders turned cautious with the Securities and Exchange Board of India (Sebi) in its latest data showing that Investment in the Indian capital markets through participatory notes slightly dropped to Rs 96,292 crore at the end of December 2022 from the preceding month on higher valuation of domestic markets. Some anxiety also came after Christian de Guzman - senior vice president at Moody's Investors Service and primary analyst for India said that India's gross domestic product (GDP) growth is seen declining to 5.6 percent in 2023-24, although it will still be one of the best performing large economies in the G-20. Besides, provisional data available on the NSE showed that foreign institutional investors (FII) have net-sold shares worth Rs 219.87 crore on January 23, 2023. Finally, the BSE Sensex rose 37.08 points or 0.06% to 60,978.75 and the CNX Nifty was down by 0.25 points to 18,118.30.

The US markets ended mostly lower on Tuesday as traders expressed some uncertainty about the near-term outlook for the markets following recent volatility. Uncertainty about the outlook for interest rates and the economy have also kept some traders on the sidelines ahead of the release of some key economic data in the coming days. Further, a negative reaction to some of the latest earnings news contributed to pullback, with 3M (MMM) posting a steep loss after reporting weaker than expected fourth quarter earnings and providing disappointing guidance. Most of the major sectors ended the day showing only modest moves, contributing to the lackluster close by the broader markets. Natural gas stocks showed a significant move to the downside, however, with the NYSE Arca Natural Gas Index falling by 1.3 percent. On the economic data front, continuing to signal a near-term recession for the U.S. economy, the Conference Board released a report showing another sharp drop by its reading on leading U.S. economic indicators in the month of December. The Conference Board said its leading economic index dove by 1.0 percent in December after tumbling by a revised 1.1 percent in November. Street had expected the index to decrease by 0.7 percent compared to the 1.0 percent slump originally reported for the previous month. Meanwhile, the report said the coincident economic index inched up by 0.1 percent in December after coming in unchanged in November.

Crude oil futures ended sharply lower on Tuesday on concerns about a global economic slowdown and expected build in U.S. oil inventories. Oil prices fell despite a weak dollar and hopes of a recovery in fuel demand from China. The dollar shed ground amid bets the Fed will slow the pace of interest rate hikes following a drop in consumer prices. Meanwhile, U.S. business activity contracted in January for the seventh straight month, though the downturn moderated across both the manufacturing and services sectors for the first time since September and business confidence strengthened as the New Year began. Benchmark crude oil futures for March delivery fell 1.49 or 1.8 percent at $80.13 a barrel on the New York Mercantile Exchange. However, Brent crude for March delivery dropped $2.06 or 2.34 percent at $86.13 (Provisional) a barrel on London's Intercontinental Exchange.

Indian rupee continued its downtrend for the second-straight day against the US dollar on Tuesday, as unabated foreign fund outflow hit market sentiments. Traders remained worried after Christian de Guzman - senior vice president at Moody's Investors Service and primary analyst for India said that India's gross domestic product (GDP) growth is seen declining to 5.6 percent in 2023-24, although it will still be one of the best performing large economies in the G-20. However, a weak dollar and fall in crude prices capped the some losses in the local currency. On the global front, dollar hovered near a nine-month low against the euro and surrendered recent gains against the yen on Tuesday, as traders weighed the risks of a U.S. recession against the outlook for Federal Reserve monetary policy. Finally, the rupee ended at 81.68 (Provisional), weaker by 26 paise from its previous close of 81.42 on Monday.

The FIIs as per Tuesday's data were net buyers in both equity and debt segments. In equity segment, the gross buying was of Rs 5814.34 crore against gross selling of Rs 5590.11 crore, while in the debt segment, the gross purchase was of Rs 144.75 crore against gross selling of Rs 113.72 crore. Besides, in the hybrid segment, the gross buying was of Rs 1.89 crore against gross selling of Rs 3.33 crore.

The US markets ended mostly in red on Tuesday amid mixed earnings and a technical malfunction at the opening bell. Asian markets are trading mixed on Wednesday taking the lead from Wall Street's struggle for direction. Indian markets ended flat in a volatile session on Tuesday as profit booking erased all the intraday gains to close with little change. Today, markets are likely to open in red amid lackluster global cues. Some volatility may occur as the monthly F&O expiry for January derivatives contracts will keep investors occupied. Traders will be concerned as foreign institutional investors (FII) have net sold shares worth Rs 760.51 crore on January 24, as per provisional data available on the NSE. Market sentiments may continue to remain sluggish as Christian de Guzman - senior vice-president at Moody's Investors Service and primary analyst for India said that India's gross domestic product (GDP) growth is seen declining to 5.6 percent in 2023-24, although it will still be one of the best performing large economies in the G-20. Traders may take note of Commerce and Industry Minister Piyush Goyal's statement that in the talks for the proposed free trade agreement between India and the UK, the focus is on what is acceptable to both countries and not allow sensitive issues to scuttle the discussions. He also said that student visas are never part of a free trade agreement (FTA). Sugar industry stocks will be in focus as Union Cooperation Minister Amit Shah assured leaders from Maharashtra that the Centre would soon increase the export quota sugar and take steps to help the ailing sugar industry in the state. There will be some reaction in oil industry stocks as FICCI said that the government should scrap the windfall profit tax on domestically produced crude oil as the levy is adversely impacting the capex-intensive exploration of oil and gas. Investors await more of financial results from India Inc for domestic cues, with Bajaj Auto, Cipla, Dr Reddy's and Tata Motors due to post their earnings later in the day.

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

Nifty Top volumes

• NTPC has successfully completed trial operation of Unit-1 of 660 MW capacity of North Karanpura Super Thermal Power Project (3 x 660 MW). 
• Bharti Airtel has launched its cutting edge 5G services in Coimbatore, Madurai, Hosur, Trichy. 
• Coal India's arm -- Mahanadi Coalfields (MCL) is in the process of diversifying into power generation and will set up a coal-based plant entailing an investment of around Rs 12,000 crore in Odisha. 
• Reliance Industries' subsidiary -- Reliance Jio Infocomm has launched its True 5G services across 50 cities.