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Indian benchmark indices, Sensex and Nifty, closed half a percent lower Tuesday for the second session in a row as investors digested a slew of quarterly earnings. Today, the start of session is likely to be cautious amid weak global cues. There will be some volatility in the run-up to Thursday's F&O expiry. Traders will be concerned as the International Monetary Fund (IMF) sharply scaled down India’s economic growth projection by 300 basis points to 9.5 per cent for the current financial year from 12.5 per cent estimated earlier in April. IMF said the downward revision is owing to lack of access to vaccines and possibility of renewed waves of coronavirus. There will be some cautiousness as Periodic Labour Force Survey (PLFS) conducted by National Statistical Office (NSO) showed that unemployment rate for women fell to 4.2 per cent in 2019-20 from 5.1 per cent in 2018-19. Meanwhile, the Directorate General of GST Intelligence (DGGI) has detected tax evasion worth Rs 278 crore by bidders who were awarded railway tenders since 2017. However, traders will be taking encouragement with Minister of State for Finance Pankaj Chaudhary’s statement that increased tax collection in the first quarter this fiscal shows that the economy is on the recovery path. Net direct tax collection in the April-June quarter of the current fiscal is over Rs 2.46 lakh crore, as against more than Rs 1.17 lakh crore during the same period of the previous fiscal. Some support will come as Union Health minister Mansukh Mandaviya said Covid-19 vaccination for children is likely to begin by September.  There will be some buzz in the pharma stocks with report that the production linked incentive scheme (PLI) for pharmaceutical products has export generation potential of Rs 1,96,000 crore over a period of six years. Aviation industry stocks will be in focus as the International Air Transport Association (IATA) wants India to restart scheduled international flights and end capacity and fare capping in domestic market as these distort competition and hurt consumers. There will be some reaction in tourism industry stocks with report that tourism economy fell by nearly 43 per cent and an estimated 14.5 million jobs were lost in the first quarter of 2020-21 as the COVID-19 pandemic and resultant lockdown decimated the sector which directly employed 34.8 million people in the country the year before. There will be some important earnings announcements too to keep the markets buzzing.

The US markets ended lower on Tuesday as investors were cautious before results from top tech and internet names and Wednesday's Federal Reserve announcement. Asian markets are trading mixed on Wednesday tracking a weak Wall Street.

Back home, Indian equity benchmarks wiped off early gains to close in red on Tuesday, tracking losses in index majors Dr. Reddy's Lab, Axis Bank and Kotak Mahindra Bank amid global sell-off. Markets made positive start, as traders took encouragement with Care Ratings’ report that the country's gross domestic product (GDP) growth is likely to be 8.8 to 9 per cent in the current financial year, driven by agriculture and industry sectors. The country's economy had contracted by 7.3 per cent in fiscal 2020-21. Some support came in as the government's total tax collection in the April-June quarter grew about 86 per cent to more than Rs 5.57 lakh crore. Out of the total amount, collection of net direct tax stood at Rs 2.46 lakh crore and of indirect tax was at Rs 3.11 lakh crore. Sentiments also remained positive with Minister of State for Finance Bhagwat K Karad’s statement that non-performing assets (NPAs) or bad loans of banks have declined by Rs 61,180 crore to Rs 8.34 lakh crore at the end of March 31, 2021, as result of various steps taken by the government. However, key indices erased gains to trade in red terrain in afternoon trade, as some concern came with private report stated that business resumption activities, which had been gathering pace after the end of the second wave, moderated for the week ended July 25. It said resumption Index declined to 95.3 from the previous week's high of 96.4, stressing that it continues to be above the pre-second wave levels. Traders also remained cautious with Moody’s Analytics in its report titled ‘APAC Economic Outlook: The Delta Roadblock’ stated that the second wave of COVID-19 may have a more lasting damage on the Indian economy and exports will once again be the foundation for recovery. It said social distancing is weighing on the current quarter, but economic recovery will resume by the year-end. Finally, the BSE Sensex fell 273.51 points or 0.52% to 52,578.76, while the CNX Nifty was down by 78.00 points or 0.49% to 15,746.45.

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