The Indian equity markets witnessed a lack-luster and volatile day of trade on Tuesday after showing firm trend in the previous session.  Sentiments came under pressure after India's wholesale price index inflation rose at a faster-than-expected pace in July, gaining 3.35 percent from 1.62 percent in June 2016. Rising for the first time in April after 17 straight months of contraction, WPI inflation has consistently been pushed up by food inflation, which has steadily risen since February. It shot up by 11.82 percent in July after rising by 8.18 percent in June and 7.88 percent in May. Furthermore, Retail inflation, which came last week, also shot up to nearly two-year high of 6.07 per cent in July, well above the Reserve Bank of India's (RBI's) comfortable level, on surge in prices of food items as the demand for sugar, oil & fats and spices rose ahead of the festival season. However, Index of Industrial production (IIP) growth surged to 2.1 percent in June as compared to 1.1 percent in May, but remained much below the 4.2 percent growth reported in June 2015, indicating a poor performance of manufacturing sector. Though, gains in commodity counters like Metal and Oil & Gas restricted the market to extend losses. Some support also came with the report that the Bihar State Legislature ratified the Constitution Amendment Bill on Goods and Services Tax (GST) in a special one-day session. On the global front, Asian market ended mostly in red on Tuesday as the price of oil took a breather from a three-day rally, while European stocks lost ground in early trade. Back home, after getting a cautious start, the local benchmarks traded in a tight range near their neutral line throughout the morning trade, but witnessed sharp selling in noon trade after the country's wholesale inflation soared to a 23-month high in July 2016. Besides, weak start of European markets coupled with depreciation in rupee value against the US dollar also weighed on the sentiment. Finally, the BSE Sensex slumped by 87.79 points or 0.31% to 28064.61, while the CNX Nifty dropped 29.60 points or 0.34% to 8,642.55.

The US markets closed lower on Tuesday, a day after notching record highs, as investors weighed hawkish comments by Federal Reserve officials against sharp gains for oil futures, a weakening dollar and fresh consumer-price data that showed US inflation remains tepid. The consumer price index rose 0.8% compared to a year ago. Core CPI, which strips out the volatile food and energy categories, rose 2.2%, lower than the 2.3% yearly change in June. The cost of food was unchanged in July, and has risen 0.2% over the past year, the smallest increase since the 12 months ending in March 2010. Energy prices declined 1.6% and are 10.9% lower for the year. Real hourly wages, those which account for inflation, increased 0.4% in July, more than reversing the 0.2% decline in June. Wages are up 2.0% over the year. On the other hand, home builders broke ground on more structures than expected in July as confidence in the economy and demand for housing continues to expand. Housing starts ran at a seasonally adjusted 1.21 million annual rate, a 2.1% increase over an upwardly-adjusted June figure. The Dow Jones Industrial Average lost 84.03 points or 0.45 percent to 18,552.02, Nasdaq was down 34.91 points or 0.66 percent to 5,227.11, while S&P 500 dropped 12.00 points or 0.55 percent to 2,178.15. 

Crude oil futures strengthened on Tuesday and rose to fresh one month's high on dollar weakness, which fell after a tame inflation data. The Labor Department's Consumer Price Index was flat following two straight monthly increases of 0.2 percent. Investors also continued to weigh the possibility that discussions between leading OPEC producers at an energy forum next could help stabilize global oil prices. Benchmark crude oil futures for September delivery gained $0.83 or 1.84 percent to close at $46.58 a barrel after trading in a range of $45.34 and $46.61 a barrel on the New York Mercantile Exchange. In London, Brent oil futures for October delivery was up by $0.95 or 1.95 percent to $49.32 a barrel on the ICE.

Snapping two days losing streak, Indian rupee appreciated against dollar on Tuesday due to increased selling of American currency by exporters and banks. Besides, weakness in the dollar against other currencies overseas also supported the rupee. However, losses of local equities after the release of the crucial macro-economic data weighed on the rupee sentiment. On the macro front, India's Wholesale Price Index (WPI) inflation for month of July climbed to a two-year high at 3.55 percent as compared to 1.62 percent in the previous month, while Consumer Price Index (CPI) rose for the fourth straight month to 6.07% in July as compared to 5.76% in June 2016. On the global front, yen rallied to a five-week high against the dollar. Finally the rupee ended at 66.76, stronger by 13 paise from its previous close of 66.89 on Friday.

The FIIs as per Tuesday's data were net buyers in equity and debt segments both. In equity segment, the gross buying was of Rs 5769.30 crore against gross sell of Rs 4496.37 crore. While in the debt segment, the gross purchase was of Rs 1591.09 crore with gross sales of Rs 1183.31 crore. Thus, FIIs stood as net buyers of Rs 407.78 crore in debt.

The US markets lost momentum and slipped below the record highs in the last session, after Federal Reserve officials made hawkish comments despite anemic inflation data. However, the housing starts last month rose 2.1 percent from June to an annual rate of 1.211 million. The Asian markets have made a mixed start, though some indices are trading in green supported by energy stocks as crude oil traded above $46 a barrel. The Indian markets turned a bit somber and lost around a quarter percent in the last session, after both the inflation gauges CPI and WPI showed uptrend due to rise in food inflation. Today, the start is likely to remain cautious on sluggish global cues, amid increased speculation that the US will raise interest rates. Meanwhile, industry body Assocham has said that the rise in Wholesale Price Index (WPI)-based inflation is in line with the industry's expectation, but added that the government must take “strong action” to address the structural issues of demand and supply within the industry. Traders will be getting some support with the report that Indirect tax collection rose by about 30.8 percent during April-June to Rs 1,99,970 crore, from Rs 1,52,740 crore collected in the year-ago period. Banking stocks will be in action, as the outgoing RBI governor Raghuram  Rajan has called for a level playing field between public and private sector banks, besides expressing concern over the rush into retail credit at the expense of project finance at a time when India needs massive infrastructure funding. He reiterated the need to allow public sector banks to decide their own business strategies.

                                Support and Resistance: CNX Nifty and BSE Sensex

Nifty Top volumes

• Mahindra Agri Solutions, a 100 percent agricultural commodities-focused subsidiary of automobile major Mahindra & Mahindra, is reportedly aiming to increase its revenue by threefold in the next three years.
• BHEL has received the Letter of Intent for setting up 30 MW of Solar Photovoltaic Power Plants on Engineering, Procurement and Construction basis from West Bengal State Electricity Distribution Corporation and the order value is Rs 169 Crore.
• Hindalco Industries is planning to invest Rs 250 crore in a new wire-rod plant at Dahej in Gujarat.
• Larsen & Toubro has been identified as Implementation Partner to convert Nagpur, the Orange City, into the country's first large-scale integrated Smart City as per a Letter of Intent from Maharashtra government.
• Drug major Lupin is planning to launch around 25 products in the US market in FY17.