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In a volatile trading session, Indian equity benchmarks ended marginally lower on Tuesday, dragged by losses in Metal, Banking and Energy stocks amid weak cues from global markets. Markets made slightly positive start but soon turned negative, as domestic credit ratings agency Crisil cut its FY22 growth estimate for India to 9.5 per cent from the earlier 11 per cent due to the hit to private consumption and investments following the second wave of COVID-19. Traders took note of report that FPIs stood as net sellers in May to the tune of $397 million as against an outflow of $1,297 million seen in April. Selling further crept in as PHD Chamber of Commerce and Industry (PHDCCI) in its latest survey pointed out that businesses are struggling with rising cost of raw materials amid the second COVID wave as restrictions in many parts of the country have disrupted supply chains and also impacted the pace of economic recovery. In a survey, the industry body said that going ahead, a substantial stimulus to push the growth of the Indian economy impacted by the second wave of the pandemic would be crucial.

Benchmarks trimmed most of their losses in late afternoon session, as some support came with Fitch Solutions held an optimistic outlook for the Indian consumer over 2021 with real growth in household spending forecast at 9.1 per cent year-on-year. This marks the start of a recovery from the negative 9.3 per cent year-on-year contraction over 2020. Besides, the government pledged to provide free COVID-19 vaccines to all adults, in an effort to rein in a pandemic that has killed hundreds of thousands. Also, daily COVID-19 cases in India have been on a downward trend since early May, with data from the health ministry on Tuesday showing 86,498 infections in the last 24 hours.

On the global front, Asian markets ended mostly lower on Tuesday as investors awaited U.S. inflation data later this week for more indications about the Fed's policy outlook. European markets were trading mostly in green, as data from the British Retail Consortium showed U.K. retail sales increased notably in May driven by the relaxation of restrictions related to the coronavirus pandemic. Total sales grew 10 percent year-on-year in May and like-for-like sales climbed 23.7 percent. Back home, on the sectoral front, banking stocks were in focus as global rating agency Fitch said the Indian government's bold move to privatise public sector banks (PSBs) faces risks from political opposition and structural challenges, including heightened balance-sheet stress due to Covid-19. Agriculture stocks too were in focus as Niti Aayog Member (Agriculture) Ramesh Chand said the second COVID-19 wave will not impact the Indian agriculture sector in any way as rural areas saw the spread of infections in May when agriculture activities remained at a bare minimum.

Finally, the BSE Sensex fell 52.94 points or 0.10% to 52,275.57, while the CNX Nifty was down by 11.55 points or 0.07% to 15,740.10.    

The BSE Sensex touched high and low of 52,432.43 and 52,135.04, respectively and there were 14 stocks advancing against 16 stocks declining on the index.  

 The broader indices ended in green; the BSE Mid cap index rose 0.38%, while Small cap index was up by 0.93%.

The top gaining sectoral indices on the BSE were Telecom up by 1.72%, IT up by 1.41%, TECK up by 1.34%, Healthcare up by 1.02% and Realty up by 0.99%, while Metal down by 1.38%, Bankex down by 0.96%, PSU down by 0.51%, Energy down by 0.35% and Capital Goods down by 0.29% were the top losing indices on BSE.

The top gainers on the Sensex were Tech Mahindra up by 2.53%, Bharti Airtel up by 1.91%, HCL Technologies up by 1.83%, Infosys up by 1.68% and Titan Company up by 1.63%. On the flip side, SBI down by 1.21%, HDFC down by 1.18%, Kotak Mahindra Bank down by 1.11%, HDFC Bank down by 1.01% and Power Grid Corporation down by 0.93% were the top losers.

Meanwhile, domestic credit ratings agency Crisil has cut India’s gross domestic product (GDP) growth forecast to 9.5 per cent for the current fiscal (FY22) as compared to 11 percent projected earlier due to the hit to private consumption and investments following the second wave of COVID-19. It joins other watchers who have cut their FY22 growth projections, with some pegging it as low as 7.9 percent. The economy had contracted by 7.3 percent in FY21.

It also said downward revision is premised on the clearly evident hit to the two engines of growth -- private consumption and investment -- by the second wave. It noted that daily cases have mercifully peaked, but states will be cautious about unlocking anytime soon owing to risks of another wave and tardy vaccinations. It underlined that this is unlike what was witnessed after the first wave last fiscal, when a largely uniform and calibrated reopening spurred quite a sharp recovery.

The agency further said it has assumed that COVID-19 restrictions will continue and mobility will remain affected in some form or other, at least till August, adding that the pace of recovery will also be a function of how the vaccination drive progresses in the coming months. It also said a third wave would pose a significant downside risk to the growth forecast, as would a slower-than-anticipated pace of vaccination. In such a pessimistic case, it sees GDP growing at 8 percent.

The CNX Nifty traded in a range of 15,778.80 and 15,680.00 and there were 27 stocks advancing against 22 stocks declining, while 1 stock remains unchanged on the index.      

The top gainers on Nifty were Tata Motors up by 3.18%, Tech Mahindra up by 2.28%, Bharti Airtel up by 2.06%, Indian Oil Corporation up by 1.87% and HCL Technologies up by 1.83%. On the flip side, Hindalco down by 1.77%, Tata Steel down by 1.66%, JSW Steel down by 1.31%, Kotak Mahindra Bank down by 1.26% and HDFC down by 1.19%.

European markets were trading mostly in green; UK’s FTSE 100 increased 8.41 points or 0.12% to 7,085.63 and France’s CAC increased 1.01 points or 0.02% to 6,544.57 while, Germany’s DAX decreased 22.17 points or 0.14% to 15,654.98.

Asian markets ended mostly lower on Tuesday ahead of US inflation data later this week that could provide more indications about the Fed's policy outlook, while some investors standing by on news of a global minimum corporate tax rate. Japanese shares ended lower even as the Japanese government revised the contraction of the gross domestic product (GDP) for the first quarter of 2021 to 1 percent, 0.3 percent less than the preliminary data published in May. Moreover, Chinese shares ended down as investors worried about lofty valuations and lingering Sino-US tensions.

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