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Indian markets failed to hold opening gains and ended lower with cut of around half a percent each on Tuesday due to selling pressure in dying hours of trade. Today, markets are likely to open in green amid better-than-expected growth in the October Industrial Production data, coupled with lower-than-anticipated rise in November retail (CPI) inflation. India’s industrial production hit a 16-month high in October, aided by a favourable base effect. On the other hand, retail inflation in November bucked the downward trend, reaching a three-month high partly because of a seasonal spike in vegetable prices. Sentiments will get a boost as Finance Minister Nirmala Sitahraman said the economy is moving in the right direction, and India has become the fastest-growing major economy in the world. She added Q2 growth of 7.6 per cent is the highest in the world. Some support will come as Fitch Ratings said India is likely to see broad policy continuity after elections in 2024, as the current dispensation is most likely to return to power. Traders may take note of report that the Lok Sabha cleared a net additional spending of Rs 58,378 crore in the current fiscal ending March 2024, with a large chunk going towards MGNREGA and subsidy on fertiliser. The gross additional spending sought by the government was over Rs 1.29 lakh crore, of which Rs 70,968 crore would be matched by savings and receipts. Meanwhile, in a bid to ease the compliance burden of alternative investment funds (AIFs), the Securities and Exchange Board of India (Sebi) has given them more time to credit units into the demat account of investors. However, there may be some cautiousness ahead of the US Federal Reserve's monetary policy outcome, due later tonight. Baking stocks will be in focus with report that public sector banks (PSBs) have written off aggregate loan amount of Rs. 10.42 lakh crore in the last nine years; according to data provided by the government in Parliament.

The US markets ended higher on Tuesday after inflation data did little to alter views for the timing of a rate cut by the Federal Reserve, as investors awaited the central bank's last policy decision of the year. Asian markets are trading mostly in red on Wednesday as traders waited for the year's final policy decision from the Federal Reserve and clues on whether the central bank will cut rates next year.

Back home, Indian equity benchmarks erased early gains and ended lower in the volatile session on Tuesday, due to profit taking by investors ahead of release of crucial CPI and IIP data due later in the day. The US Federal Reserve’s policy decision also remained in focus. Markets started the trading session on a positive note, as traders took some support with the Reserve Bank of India (RBI) in its report on state budgets, which is done annually, stating that states' finances improved in FY23, and there is a need to look at asset monetisation to help garner non-tax revenues. It stated road, transport and power sectors hold considerable potential where the states can undertake asset sales. Some support also came with provisional data from the National Stock Exchange (NSE) showing that foreign institutional investors (FIIs) net bought shares worth Rs 1,261.13 crore on December 11. However, markets erased all of their initial gains and fell sharply in second half of trading session, as traders turned cautious with the International Monetary Fund's official warning that fragmentation in the global economy and clear shifts in underlying bilateral trade could trigger a new Cold War given the conflict in Ukraine and U.S.-China tensions. Traders overlooked Finance Minister Nirmala Sitharaman’s statement that retail inflation is now stable and temporary increases in inflation on a few occasions are caused by demand-supply mismatches arising out of global shocks and adverse weather conditions. Traders also paid no heed towards report that the government is likely to stick to the budgeted estimate of total tax collection target of Rs 33.61 lakh crore for current fiscal in the revised estimates. So far, direct tax collection is up by about 20 per cent and indirect tax is higher by 5 per cent. Finally, the BSE Sensex fell 377.50 points or 0.54% to 69,551.03 and the CNX Nifty was down by 90.70 points or 0.43% to 20,906.40.