Indian stocks markets turned a volte-face on Tuesday, as what started on a promising note ended as a dismal show. The optimism in domestic markets petered out completely by the end of trade and the benchmarks even drifted into the negative territory for the second consecutive session despite getting off to a gap-up opening. Marketmen remained optimist for half of the session with the report that India's infrastructure sectors clocking their highest growth in 16 months in March 2016, with the index for core industries climbing 6.4 per cent, against 5.7 per cent in February. Some support also came in from reports that foreign portfolio investors (FPIs) bought shares worth a net Rs 435 crore on May 02, 2016. However, the sanguinity in local markets came under check as profit booking in metal, PSU and Oil & Gas counters exerted downside pressure on the frontline indices. Furthermore, investors turned jittery after International Monetary Fund (IMF) in its report indicated that China and Japan's economies are expected to slow sharply over the next two years but Asian growth will remain strong as domestic demand takes up the slack from weak global trade. In its Regional Economic Outlook for Asia and the Pacific, the fund also warned of several external challenges, from weakness in advanced economies, weak global trade and increasingly volatile global financial markets. On the domestic front, sentiments were undermined by the repot that the growth in India's manufacturing sector slowed sharply in April as new business inflows were broadly unchanged during the month. On the global front, Asian marketed ended mixed on Tuesday, while European shares opened lower weighed down by selling pressure in mining and autos. Back home, after getting positive start, the local benchmark indices extended their gains and touched the day's highs in mid morning trade, as investors turned optimistic after the combined output of eight crucial infrastructure sectors jumped to a 16-month high of 6.4% in March. However, sentiments turned pessimistic in afternoon session and the indices started declining, on account of profit booking in some specific sectors and weak start of the European markets. Finally, the BSE Sensex declined by 207.27 points or 0.81% to 25229.70, while the CNX Nifty dropped 58.90 points or 0.75% to 7,747.00.

The US market closed lower on Tuesday, as weaker-than-expected manufacturing data in China revived worries about global growth and sent investors scurrying out of the perceived risk of equities. European equities sold off, while commodity prices as well as currencies of commodity-exporting countries fell after a surprise interest-rate cut in Australia added to global economic jitters. On the economy front, economic woes from weak commodity prices are spreading in the oil patch from energy firms to other businesses and consumers, according to a Federal Reserve survey of senior bank loan officers released report. Bank officers reported that credit quality deteriorated in the first quarter on loans to businesses and consumers in energy dependent areas of the country. In particular, credit quality on auto loans had suffered, with 23% of banks reporting deterioration, according to the survey of 70 domestic and 22 branches of foreign banks operating in the US. About 15% of banks reported that credit quality had worsened on consumer credit card loans and 14% on loans outside of credit card and autos. The Dow Jones Industrial Average lost 140.25 points or 0.78 percent to 17,750.91, Nasdaq was down by 54.37 points or 1.13 percent to 4,763.22 while, S&P 500 dropped 18.06 points or 0.87 percent to 2,063.37.

Crude oil futures extended their decline for the second straight session, as rising output renewed worries about the global glut of crude. Also the US dollar rebounded and equity markets weakened, weighing down the sentiments. The dollar index rose for the first time since April 22, making dollar-denominated oil less attractive to holders of the euro and other currencies. Traders were eyeing release of fresh inventory data from American Petroleum Institute for further cues. Benchmark crude oil futures for June delivery declined by $1.13 or 2.5 percent to $43.65 a barrel after trading in a range of $43.38 and $45.34 a barrel on the New York Mercantile Exchange. In London, Brent crude for June delivery closed at $44.97, down $0.86 or 1.9 percent on the ICE.

Indian rupee ended marginally stronger against dollar on Tuesday due to selling of American currency by banks and exporters. Further weakness in dollar overseas too supported the domestic currency. Some support came in with the combined output of eight crucial infrastructure sectors which jumped to a 16-month high of 6.4% in March due to a double-digit growth in refinery products, fertilizers, cement and electricity. However, losses in local equity market capped gains in the rupee. On the global market, yen was high against a weak dollar on Tuesday, extending gains that have undermined Japanese officials' attempts to reflate the developed world's most stagnant economy. Finally, the rupee ended at 66.42, 2 paise stronger from its previous close of 66.44, on Monday.

The FIIs as per Tuesday's data were net buyers in equity and debt segments both. In equity segments, the gross buying was of Rs 2986.67 crore against gross selling of Rs 2637.70 crore, while in the debt segment, the gross purchase was of Rs 500.55 crore with gross sales of Rs 333.77 crore.          

The US markets ended lower in last session mainly on global growth concerns, after a disappointing manufacturing data from China and a surprise rate cut in Australia. The Asian markets have made mostly a lower start with some of the indices extending their longest losing streak since February, as anxiety over the health of the global economy unnerves investors. While, the Japanese market are closed Hong Kong market slumped to a three-week low. The Indian markets extending their weakness lost close to a percent in last session, markets lost ground in second half amid rampant profit taking. Today, the start is likely to remain weak tailing the feeble global cues after two prominent members of the US Federal Reserve's Open Market Committee overnight said they intend to support an interest rate hike in June. On domestic front too doubts have cropped up on whether the rains would be as good as the market is expecting them to be. Meanwhile, the International Monetary Fund (IMF) Regional Economic Outlook for Asia and Pacific has said that structural reforms, including GST and in areas like land and labour, will be key to boost India's economic growth potential going forward. Though, IMF has retained its growth forecast for India this year at 7.5 percent. There will be a buzz in the telecom stocks, as a Parliamentary panel has said that government targets a revenue of Rs 64,580.92 crore in the current financial year from spectrum auction proceeds. The inter-ministerial panel Telecom Commission recently agreed to base prices of various frequency bands recommended by the regulator Trai for the auction to be held in July this year. The aviation stocks may continue to remain under pressure, as after ATF price hike, the government is set to hold talks with domestic airlines to cap airfares on short routes during natural calamities or unpredictable situations. There will be some important result announcements too, to keep the markets buzzing.

Support and Resistance: NSE Nifty and BSE Sensex

Nifty Top volumes

• BHEL has successfully commissioned a 600 MW coal-based thermal power plant in the state of Madhya Pradesh.
• Coal India, the world's largest coal miner by output, has reported provisional production of 40.09 million tonnes in April 2016, as against target of 44.48 MT, a drop by 3.40%.
• Hero MotoCorp, the world's largest two-wheeler manufacturer, commenced the new financial year 2016-17 with robust six-lakh plus sales and double digit growth in the month of April.
• ICICI Bank, India's largest private sector bank, has opened a new branch at the main market in Leh, in the Jammu and Kashmir state.
• HDFC has posted a rise of 31% in its Q4 consolidated  net profit after tax at Rs 3460.46 crore for the quarter ended March 31, 2016 as compared to Rs 2646.35 crore for the corresponding quarter in the FY15.