Indian markets showed a disappointing trade on Tuesday and major bourses got pounded by over a percentage point, as funds and retail investors engaged in reducing positions amid sluggish global cues. Investors failed to draw any sense of relief with the report that retail inflation declined to a three-month low of 5.18 per cent in February after rising for five months in a row as food prices including vegetables, pulses and fruits became less costly. A sharp decline in the consumer inflation and still negative wholesale inflation in February raised expectations of a rate cut by the Reserve Bank of India (RBI) amid disappointing industrial growth and the government staying the course on fiscal consolidation. However, the central bank may push forward its rate cut on account of recent unseasonal rain and hailstorms flattened hundreds of acres of winter crop across Haryana, Punjab and Uttar Pradesh. Sentiments remained down-beat with a leading global brokerage firm revising its growth forecast for India for 2016 to 7.5 per cent from 7.9 per cent previously. According to it, though the domestic macro environment has been improving steadily in the last two years, the pace of recovery has been slower than anticipated, held back by external factors. Depreciation in Indian rupee too dampened sentiments. Meanwhile, shares of pharmaceutical companies came under pressure after the government notified a ban on about 300 fixed dose combination drugs, while the gold and jewellary stocks declined as Finance Minister Arun Jaitley refused to roll back a 1 per cent excise duty proposed in the Budget on non-silver ornaments. On the global front, most of the Asian markets closed in the red, while the European equities too made a weak start. Back home, the benchmark got off to a weak start as the indices breached the psychological 7,500 and 24,700 levels in the early moments of trade, since investors largely remained influenced by the pessimistic sentiments prevailing in Asian markets. The selling pressure accentuated in the afternoon as investors took to across the board risk aversion immediately after a somber European market opening. Finally, the BSE Sensex plunged by 253.11 points or 1.02% to 24551.17, while the CNX Nifty dropped 78.15 points or 1.04% to 7,460.60.

The US markets closed mostly lower on Tuesday, weighed down by a rout in oil prices and a string of lackluster economic data, ahead of the Federal Reserve's important decision on interest rates. On the economy front, sales at US retailers dipped in February after an even bigger drop in January, a sign that consumers haven't ramped up spending despite steady job creation. Retail sales fell a seasonally adjusted 0.1% last month and sales for January were revised sharply lower to show a 0.4% decline instead of a 0.2% gain. Meanwhile, US wholesale prices fell 0.2% in February to mark the fifth decline in seven months, largely because of lower gasoline and food prices. The price of goods dropped 0.6% last month. Wholesale gas prices sank 15% and food declined 0.3%. On the other hand, a reading of New York-area manufacturing conditions improved markedly in March, a sign the factory sector could be stabilizing after months of weakness. The Empire State general business conditions index surged to a reading of positive 0.6 in March from negative 16.6 in February, marking the first positive reading since July. The Dow Jones Industrial Average added 22.40 points or 0.13 percent to 17,251.53, the Nasdaq was down 21.61 points or 0.45 percent to 4,728.67 while, the S&P 500 lost 3.71 points or 0.18 percent to 2,015.93. 

Crude oil futures declined for the second day in a row on Tuesday, after a monthly report from OPEC provided further signals of a widening gap between supply and demand on energy markets worldwide. As a result, OPEC lowered its demand outlook for 2016 by 90,000 to 31.52 million bpd. The forecasts still project an increase of approximately 1.8 million bpd from OPEC's average demand last year.  Benchmark crude oil futures for April delivery declined by $0.85 or 2.29 percent to $36.33 a barrel after trading in a range of $35.97 and $37.41 a barrel on the New York Mercantile Exchange. In London, Brent crude for May delivery closed at $38.71, down $0.82 or 2.07 percent on the ICE.

Indian rupee declining further for the second consecutive day, lost considerable ground on Tuesday, on increased demand for the American currency from importers and banks amid weakness in the domestic equity market. Traders largely ignored the report released late last session that Consumer Price Index-based (CPI-based) inflation softened to 5.18% in February from 5.69% a month ago. The domestic currency remained weak since morning, weighed down by firmness in dollar against some other global currencies, ahead of the US Federal Reserve's two-day policy meet scheduled to start later in the day and was later pressured by the sell-off in the local equity markets. On the global front, while the dollar rose, the yen was boosted after the Bank of Japan made no change to monetary policy. Finally, the rupee ended at 67.39, 29 paise weaker from its previous close of 67.10 on Monday.

The FIIs as per Tuesday's data were net buyers in equity segment while they were net sellers in debt segment. In equity segment, the gross buying was of Rs 5589.93 crore against gross selling of Rs 4329.87 crore, while in the debt segment, the gross purchase was of Rs 775.51crore with gross sales of Rs 1097.79 crore.         

The US markets made a mixed closing in last session, as traders were cautious ahead of Thursday's Federal Reserve interest rate decision. Traders also reacted to data showing a modest drop in retail sales in February and report showing a modest decline in producer prices in the month of February. The Asian markets too have made a mixed start with some of the indices trading in red. The Japanese market was in red despite the yen weakness after Japan's central bank President floated the prospect of further interest-rate cuts. The Indian markets suffered sharp plunge in the last session and the major averages lost over a percent, tailing the weakness in the other global markets. Today, the start is likely to be in green as the global mood has recovered and the bourses may see a bounce back in early deals. There is good news for the traders, as from March 29, global investors will be able to trade on derivatives contracts on select Indian sectors on the Singapore Exchange (SGX), in addition to on the Indian bourses. Traders will be getting some support with rate cut hopes too after Fed the policy outcome. Meanwhile, government has stated that unseasonal rains and hailstorm in the past few days have damaged wheat crop in some parts of Punjab as well as Haryana and the Centre is closely monitoring the situation. There will be some cautiousness in the market, as the Indian exports falling for the 15th month in a row, dipped 5.66 percent in February to $ 20.73 billion due to contraction in shipments of petroleum and engineering goods amid tepid global demand. However, in a consolation trade deficit fell to near five-year low of $6.54 billion during February as imports too slowed down. The gold and jewellery stocks will continue to be in action on report that gold imports in February declined 29.49 percent to $1.39 billion. The pharma stocks will be under pressure on some reports that the government may ban nearly 400 fixed-dose combination medicines made by 1,500 manufacturers in the next six months due to harmful side-effects.

Support and Resistance: NSE Nifty and BSE Sensex

Nifty Top volumes

• Wipro has entered into an agreement with Schneider Electric, a global specialist in energy management and automated systems, to develop convergent solutions for India's Smart Cities.
• Coal India has crossed 500 million tonnes of coal production for the first time in a fiscal.
• Larsen & Toubro's construction arm L&T Constructions has won orders worth Rs 1672 crore across its various businesses.
• ICICI Bank, the country's private sector lender has launched its new range of co-branded credit cards in association with the Italian luxury sports car manufacturer, Ferrari.
• Zee Entertainment Enterprises has received an approval for acquisition of 100% equity stake in Fly By Wire International.