Indian equity benchmarks scaled fresh record closing highs on Tuesday's trading session, with the Sensex and the Nifty gaining around a percent each. Key indices made a positive start of the day, aided with the Commerce and Industry Minister Piyush Goyal's statement that the tax reforms introduced by the government recently will ensure investments come back to India. Traders remained optimistic, as Union Minister Nitin Gadkari approved changes in the Interest Subvention Scheme guidelines for micro, small and medium enterprises, and said the modifications are expected to boost their productivity through access to credit at reduced cost. Extending their northward rally of the day, markets settled with strong gains, on the back of positive cues from Asian markets. The street got comfort, after the central government released Rs 35,298 crore to states to make up for the loss of revenue due to rollout of the Goods and Services Tax (GST). Separately, Economic Advisory Council of the Fifteenth Finance Commission discussed issues related to GST stabilisation and possible ways to improve tax collection for additional resource mobilisation. Advisory Council was informed about submission of the 2020-21 report and now the Commission is on its next task of preparing the report for 2021-26 period. Finally, the BSE Sensex gained 413.45 points or 1.01% to 41,352.17, while the CNX Nifty was up by 111.05 points or 0.92% to 12,165.00.

The US markets ended higher at record highs on Tuesday supported by positive economic data and relief over a truce in President Trump's trade war with China. The US said China agreed to increase imports of goods in 2020 and 2021 by a total of $200 billion more than the total in 2017, including about $40 billion of US farm goods. The deal also included Chinese action to protect American intellectual property and vague assurances not to manipulate its currency. On the economic data front, new residential construction in the US soared by more than expected in the month of November, according to a report released by the Commerce Department. The report said housing starts surged up by 3.2 percent to an annual rate of 1.365 million in November after spiking by 4.5 percent to a revised 1.323 million in October. Housing starts rose for the second straight month following a sharp pullback in September, climbing back near the twelve-year high of 1.375 million set in August. Single-family housing starts shot up by 2.4 percent to a rate of 938,000 in November, while multi-family starts spiked by 4.9 percent to a rate of 427,000. Meanwhile, the Federal Reserve released a report showing US industrial production rebounded by more than expected in the month of November. The report said industrial production jumped by 1.1 percent in November after tumbling by a revised 0.9 percent in October. The bigger than expected rebound came as manufacturing output surged up by 1.1 percent after falling by 0.7 percent for two straight months.

Crude oil futures ended higher on Tuesday following a phase-one US-China trade deal. Prices for both benchmarks finished at their highest since September 16 and posted a fourth consecutive session climb, their longest such streak of gains since October. Oil prices also moved higher ahead of the release of weekly reports on US oil inventories, which are expected to show a drop in crude oil inventories. The American Petroleum Institute is due to release its report on oil inventories in the week ended December 13, later in the day, while the Energy Information Administration is scheduled to release its report Wednesday. Benchmark crude oil futures for January gained 73 cents or 1.2 percent to settle at $60.94 a barrel on the New York Mercantile Exchange. February Brent rose 76 cents or 1.2 percent to settle at $66.10 a barrel on London's Intercontinental Exchange.

Indian rupee gave away most of its gains to end marginally higher against dollar on Tuesday, driven by weakening of the greenback in overseas markets. Traders found some solace with Commerce and Industry Minister Piyush Goyal's statement that the country is well poised to attract investments that wish to move out of China. He said the tax reforms introduced by the government recently will ensure investments come back to India. But, most of the gains were trimmed as Moody's Investors Service lowered Gross Domestic Product (GDP) growth projection for the country to 4.9% from 5.8% for the fiscal year 2019-20 (FY20). On the global front, British pound slumped against the US dollar on Tuesday, following media reports that UK Prime Minister Boris Johnson was taking a hard line on Britain's transition period for leaving the European Union. Finally, the rupee ended at 70.98, 2 paise stronger from its previous close of 71.00 on Monday.

The FIIs as per Tuesday's data were net buyers in both equity and debt segments. In equity segment, the gross buying was of Rs 5482.26 crore against gross selling of Rs 4612.65 crore, while in the debt segment, the gross purchase was of Rs 1050.51 crore with gross sales of Rs 760.28 crore. Besides, in the hybrid segment, the gross buying was of Rs 18.97 crore against gross selling of Rs 18.49 crore.

The US markets ended slightly higher on Tuesday as manufacturing and housing data topped expectations, just as the sugar rush of a partial trade deal between America and China began to wear off. Asian markets are trading mixed on Wednesday as investors take a breather after the partial US-China trade deal. Indian markets ended at record closing highs on Tuesday after Reserve Bank of India (RBI) Governor Shaktikanta Das hinted at further rate cuts. Today, the markets are likely to continue their record run with slightly positive start tracking gains on Wall Street amid continued FPI inflows. Investors will be eyeing the goods and services (GST) Council meet due later in the day. The Council is expected to review the taxation structure for shoring up the revenue as lower-than-expected collections has led to a delay in compensation payment to states. Market participants will be getting some support as Defence Minister Rajnath Singh said that India is impacted to some extent by the global economic slowdown but expressed confidence that the country will come out of the difficult situation within a short time. Also, some support will come with Crisil's report that farmers are likely to generate 7-9% more in profit during the crop year 2019-20 (July-June) because of an increase in overall prices of farm commodities on lower kharif yield and higher productivity from rabi crops. Besides, as per a private report, the government is likely to trim personal income tax rates and cut the tax on long-term capital gains from equity investments in its next budget, in a bid to spur economic growth. Traders may take note of report that the revenue department has launched measures to boost tax collections for the next four collection months, asking senior officers to achieve targets. Though, there may be some cautiousness with the International Monetary Fund (IMF) chief economist Gita Gopinath's statement that IMF will revise estimates for India's economic growth in January, which will be a significant downward cut over the previous estimate. IMF currently projects India to grow at 6.1% in 2019 and 7% in 2020. Telecom stocks will be in focus as the Telecom Regulatory Authority of India (TRAI) deferred by a year a plan to abolish interconnection usage fees (IUC) that operators pay each other for calls made from one network to another. Meanwhile, Prince Pipes and Fittings, one of India's leading pipe and fitting manufacturers, is slated to open its initial public offering (IPO) on December 18.

       Support and Resistance: NSE (Nifty) and BSE (Sensex)

Nifty Top volumes

• Reliance Industries and British energy giant BP plc have signed a partnership agreement relating to the formation of their new Indian fuels and mobility joint venture. 
• TCS has been selected by Petco to deploy TCS Optumera, an AI-powered merchandise optimization suite.  
• SBI has inked a loan agreement with KfW for $277 million for establishing an energy-efficient housing programme in India. 
• HDFC has made an application to list Commercial Paper at BSE for an Issue Size of Rs 2,000 crore.