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Indian equity markets ended lower with cut of over one percent on Tuesday on account selling in IT and TECK stocks.  Today, markets are likely to make slightly positive start amid firm cues from global markets.  Traders may get some encouragement as Ministry of Commerce and Industry joint secretary M Balaji said the Economic Cooperation and Trade Agreement (ECTA) signed between India and Australia would provide immediate market access at zero duty accounting 96.4 per cent of India’s exports in value terms to Australia.  He said the ECTA has the potential to double bilateral ties between the two countries to USD 50 billion over the next five years.  Traders may take note of private report that the central government is likely to further consolidate its fiscal deficit by 50 basis points (bps) to 5.9 per cent in FY24 from 6.4 per cent in FY23. However, there may be some cautiousness in the markets later in day as the World Bank slashed its 2023 growth forecasts to levels teetering on the brink of recession for many countries as the impact of central bank rate hikes intensifies, Russia’s war in Ukraine continues, and the world’s major economic engines sputter. The development lender said it expected global GDP growth of 1.7% in 2023, the slowest pace outside the 2009 and 2020 recessions since 1993. In its previous Global Economic Prospects report in June 2022, the bank had forecast 2023 global growth at 3.0%. Further, sentiments may also weak as a private report stating that private equity investments into domestic companies fell sharply year-on-year by 42 per cent to USD 23.3 billion in 2022, which is the lowest since 2019, when it was USD 15.8 billion. The numbers reflect the overall funding winter that the startup space in particular, and the overall foreign investments in general have been witnessing since the Ukraine war began last February. There will be some reaction in gem and jewellery stocks as GJEPC said the overall gem and jewellery exports in December declined 11.25 per cent to Rs 19,432.88 crores (USD 2,356.70 million) due to rising prices, affecting the cost of living and talks of a downturn in the US. During December 2021, the overall gems and jewellery exports stood at Rs 21,896.46 crores (USD 2,905.79 million). There may be some buzz in real estate related stocks as a private report said that Indian real estate got $5.2 billion of institutional investments across 47 deals in the calendar year 2022 (CY22), a time of geopolitical headwinds and inflationary pressures. Investments increased 19 per cent compared to 2021.

The US markets ended higher on Tuesday, which were laden with ups and downs amid high volatility. Asian markets were trading mostly in green following a higher close on US markets.

Back home, Indian equities suffered weakness on Tuesday, with both the larger peers, Sensex and Nifty, closing the day below their psychological levels of 60,150 and 17,950, respectively, dragged down by Telecom, Banking and Financial Services stocks amid a weak trend in global markets. The indices made a weak start and remained sluggish throughout the day impacted by unabated foreign fund outflows. According to exchange data, foreign Institutional Investors (FIIs) offloaded shares worth Rs 203.13 crore on Monday. Key gauges extended fall in afternoon deals, as sentiments remained negative, amid a private report stating that the impact of COVID-19, combined with geopolitical turmoil, an economic crisis and natural disasters, has pushed social progress backwards. During the session, markets participants ignored a private report stating that India's retail inflation is likely to remain steady in December, staying within the Reserve Bank of India's comfort zone for a second month as a moderation in food price rises was partly offset by elevated core inflation. It said retail inflation is likely remained steady at 5.9% in December. Traders also overlooked Chief Economic Advisor (CEA) V Anantha Nageswaran’s statement that the Indian economy will be $3 trillion by the end of the current 2022-23 fiscal and is expected to be $7 trillion in the next seven years. He also said that the calendar year 2023 began in the context of the continuing conflict between Russia and Ukraine, which will create geo-political and geo-economic uncertainties. Finally, the BSE Sensex fell 631.83 points or 1.04% to 60,115.48 and the CNX Nifty was down by 187.05 points or 1.03% to 17,914.15.

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