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Indian markets gave up intraday gains of more than one percent in the last hour of trade and ended lower on Tuesday, dragged by a sharp reversal in financial and IT shares. Today, markets are likely to make optimistic start tracking sharp fall in crude oil prices, which slumped 8 percent to drift below $100 a barrel for the first time since May. Some support may come as foreign institutional investors (FIIs) turned net buyers for the first time since May 30, buying shares worth Rs 1,295.84 crore on July 5, as per provisional data available on the NSE. Traders may take note of report that Union food and consumer affairs minister Piyush Goyal has asked states to encourage farmers to increase sowing area for paddy and wheat as higher domestic production will boost India’s exports. Besides, revenue secretary Tarun Bajaj said that the government may bring more services under the tax net before it restructures the goods and services tax (GST) slabs. Meanwhile, CII’s President Sanjiv Bajaj has pitched for the simplification of Goods and Services Tax structure, and suggested that electricity as well as fuel should be brought under the GST ambit as that will help make the industry more competitive. There will be some buzz in gold related industry stocks with a private report that volume of India’s gold import almost trebled in June from a year before to 49 tonne, albeit on a low base, as jewellers continued to stock up after good sales during the Akshaya Tritiya, considered auspicious for buying the precious metal. Fertilizer industry stocks will be in focus as Union Minister for Chemicals and Fertilisers Mansukh Mandaviya said India will not need to import urea by 2025-end as the domestic production of conventional urea and nano liquid urea is expected to be sufficient to meet the country’s annual demand. There will be some reaction in edible oil industry stocks as the food ministry has called a meeting with edible oil industry bodies and manufacturers to discuss reduction in the retail prices of cooking oils amid a fall in global prices. Steel and cement industry stocks will be in limelight as Fitch Ratings forecast strong medium-term growth to support the demand for India's steel, cement and chemicals sectors, with improved economic activity boosting power and petroleum product sales.

The US markets ended mostly higher on Tuesday as concerns about the state of the economy offset signs of an easing in U.S.-China tensions. Asian markets are trading mostly in red on Wednesday as fears of an economic downturn deepened.

Back home, Indian equity benchmarks gave up intra-day gains to close marginally lower on Tuesday on emergence of fag-end selling in IT, TECK and Banking stocks and weak opening in European stock markets. Domestic markets had started strong by extending yesterday’s gains, as traders got encouragement with Crisil Ratings’ report that non-Banking Financial Company-Microfinance Institutions (NBFC-MFIs) are likely to see revival in their profitability in the current fiscal, helped by the flexibility to set lending rates under the new regulatory framework for MFIs and lower credit cost. Key gauges extended gains in afternoon deals, as India's dominant services industry expanded at the fastest pace in over eleven years in June amid strong demand but stubborn inflation remains a concern as prices charged rose at the sharpest rate in almost five years. The S&P Global India Services Purchasing Managers' Index rose to 59.2 in June from 58.9 in May, its highest since April 2011. However, benchmark indices made a U-turn in the final hour to end in red as concerns about steep hikes in COVID-era interest rates and their impact on global growth kept investors cautious globally. Some concern also came as the preliminary data released by the commerce ministry showing that India’s merchandise trade deficit surged to a new high of $25.6 billion in June amid slowing demand for Indian exports and rising imports of gold, coal and crude oil. Exports grew 16.8 per cent year-on-year to $38 billion in June while imports jumped 51 per cent to $63.6 billion. Finally, the BSE Sensex fell 100.42 points or 0.19% to 53,134.35 and the CNX Nifty was down by 24.50 points or 0.15% to 15,810.85.

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