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Indian markets ended lower on Tuesday as investors took home profit after solid gains in 2023, amid rising Covid-19 cases in the country, and mixed trends in Asia. Today, domestic indices are likely to get negative start in line with losses in global markets. Investors will be looking ahead to the Manufacturing PMI data to be released later in the day for more directional cues.  Some pessimism will be there amid crude oil price fluctuations as tensions are on a rise with Iran's deployment of a warship in the Red Sea in response to the US Navy destroying three Houthi boats. However, some respite may come later in the day amid foreign fund inflows. Foreign institutional investors (FIIs) bought shares worth Rs 1,602.16 crore on January 2, provisional data from the NSE showed. Some support may come with a private report projecting a much lower current account deficit which is likely to print at 1 per cent for this fiscal, leaving the balance of payment surplus at $39 billion, as the country's external balances are stronger than expected on the back of strong inflows. Traders may take note of a report by economic think tank GTRI stating that countries ranging from large economies like Europe, and the UK to smaller ones, including Oman and Peru, want to have a free trade agreement with India due to the country's large and rapidly growing market. Besides, Transactions through the unified payments interface (UPI) platform crossed the 100 billion-mark in calendar year 2023 to close at around 118 billion, as per the data shared by the National Payments Corporation of India (NPCI). This marks a 60 percent growth as compared to 74 billion UPI transactions recorded in 2022. There will be some reaction in sugar sector stocks after the National Federation of Cooperative Sugar Factories said Indian mills produced 11.21 million metric tons of sugar between October 1 and December 31, down 7.6% from the previous year, on lower production in key producing states Maharashtra and Karnataka. Tea industry stocks will be in focus as tea production in the country has dipped by 6.18 per cent to 127.12 million kilograms in November 2023. According to Tea Board data, the production in the year-ago month was 135.49 million kgs. Meanwhile, Adani Group stocks will be in limelight as all eyes on the Supreme Court's final verdict on the Adani Group-Hindeburg Research case today. 

The US markets ended mostly lower on Tuesday as some traders continued to cash in on recent strength, particularly among technology stocks. Asian markets are trading in red on Wednesday as market optimism about early and aggressive U.S. interest rate cuts ebbed ahead of the release of Fed minutes and jobs data.

Back home, Indian equity benchmarks ended lower on Tuesday amid weak trends from Asian markets. After making a cautious start, key gauges soon slipped into red as investors opted to book profits after the recent sharp rally in the markets. Traders got anxious after provisional data from the NSE showed foreign institutional investors (FIIs) sold shares worth Rs 855.80 crore on January 1. Sentiments remained down-beat with a report by Global Trade Research Initiative (GTRI) stating that India, despite being one of the few developing countries self-sufficient in food, still shipped in $33 billion of farm products in 2023 with more than half of it just accounted for by vegetable oils. Besides, fears over new Covid variant along with depreciation in Indian rupee against dollar also weighed on market sentiments. However, markets managed to cut some of their initial losses in late afternoon deals, as traders took some support with data released by the Ministry of Finance showing that the gross GST collections in December 2023 were recorded at Rs 164,882 crore, 10.3% higher than Rs 149,507 crore in December 2022. Some support also came as the government has relaxed norms governing public expenditure exceeding Rs 500 crore during the fourth quarter (January-March) of the current financial year. Instructions to this effect were issued by the finance ministry through an office memorandum last week. Meanwhile, the Ministry of Finance said a record high of 8.18 crore Income Tax Returns (ITRs) were filed in assessment year (AY) 2023-24 as of December 31, 2023. The number of ITRs filed marks a 9 percent jump compared to the preceding assessment year when a total of 7.51 crore ITRs were filed. Finally, the BSE Sensex fell 379.46 points or 0.53% to 71,892.48 and the CNX Nifty was down by 76.10 points or 0.35% to 21,665.80.

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