Indian benchmark indices witnessed a dismal trading session on Tuesday, as investors turned jittery ahead of the Reserve Bank of India's (RBI) monetary policy review meet tomorrow. With the excess liquidity in the banking system, RBI is unlikely to cut interest rates on Wednesday to tackle a growth slowdown. The central bank is still grappling with more than $60 billion in excess liquidity after the government's crackdown on high-denomination notes last year, even after raising the reverse repurchase rate in April and deploying an array of instruments to soak up the funds. Sentiments also remained subdued with the report that Indian companies raised around Rs 33,400 crore in May through private placement of corporate bonds, a slump of 44% from the year-ago level, for business expansion and propping up working capital needs. According to latest data available with markets regulator SEBI, firms garnered a total of Rs 33,389 crore in May 2017, lower than Rs 59,801 crore raised in the year-ago period. Besides, weak trend in Asian stocks also weighed on the trading sentiments. However, losses remained capped with the report that India has surpassed China to secure the top position among 30 developing countries on ease of doing business. The 2017 Global Retail Development Index (GRDI), now in its 16th edition, ranks the top 30 developing countries for retail investment worldwide and analyses 25 macroeconomic and retail-specific variables. Meanwhile, the progress of the monsoon continues to be stuck along the Kochi-Tondi-Agartala-Williamnagar-Kokrajhar axis linking the west coast and North-East India but it is a matter of a few days before it resumes its northward journey. Even in Kerala, the rains are yet to reach the northern districts beyond Ernakulam and Thrissur, according to trends in recorded rainfall till Monday. Finally, the BSE Sensex lost 118.93 points or 0.38% to 31,190.56, while the CNX Nifty was down by 37.95 points or 0.39% to 9,637.15.

The US markets closed lower on Tuesday, for the second session as market sentiment turned jittery ahead of a UK general election and uncertainties associated with former Federal Bureau of Investigation boss James Comey's testimony to the Senate later this week. The head of the Inter-American Development Bank (IADB) said that US President Donald Trump's proposed spending cuts for Central America are ‘not a good sign' for efforts to reduce immigration from the poor, violent region. On the economy front, US job openings surged to a record high in April and employers appeared to have trouble finding suitable workers, pointing to a tightening labor market that could encourage the Federal Reserve to raise interest rates next month. The Labor Department's monthly Job Openings and Labor Turnover Survey, or JOLTS, published also suggests that a recent moderation in job growth could be the result of a skills mismatch rather than easing demand for labor. The Dow Jones Industrial Average lost 47.81 points or 0.23 percent to 21,136.23, Nasdaq was down 20.62 points or 0.33 percent to 6,275.06, while S&P 500 edged lower by 6.77 points or 0.28 percent to 2,429.33.

Crude oil futures made a good bounce back on Tuesday, finding technical support after sliding below $47 a barrel on pressure from a diplomatic rift in the Middle East, there were speculation that recent losses were overdone. Meanwhile, oil ministers assured markets that the diplomatic rift between Qatar and several Arab states would not undermine the global pact to tackle the glut in supply. The prices have declined in last couple of day amid expectations the global supply glut will linger into next year, as U.S. drillers added rigs for 20 weeks in a row, and with President Donald Trump reversing bans on Arctic exploration. Benchmark crude oil futures for July delivery ended up by $0.79 or 1.7 percent to $48.19 on the New York Mercantile Exchange. In London, Brent crude for July delivery ended higher by 1.17 percent to $50.05 on the ICE.

Snapping its four-day winning streak, Indian rupee ended marginally weaker against dollar on Tuesday, due to demand for greenback by banks and importers. Traders remained on sidelines ahead of the two-day policy review by RBI's monetary policy committee (MPC) starting today. The street is expecting the MPC to turn dovish and to be open for a 25 bps cut in interest rates on August 2 if rains are normal. Investors shrugged off the report that India has surpassed China to secure the top position among 30 developing countries on ease of doing business. The rupee sentiment was also hit due a weak domestic equity market. On the global front, dollar fell below the 110 level against the yen on Tuesday, hitting a one-and-a-half month low as investor jitters over looming geopolitical risk events underpinned safe haven demand. Finally, the rupee ended at 64.42, 6 paise weaker from its previous close of 64.36 on Monday.

The FIIs as per Tuesday's data were net sellers in equity segment, while they were net buyers in debt segment. In equity segment, the gross buying was of Rs 4280.24 crore against gross selling of Rs 4391.98 crore. In the debt segment, the gross purchase was of Rs 864.33 crore with gross sales of Rs 499.49 crore.

The US markets extended their weakness and ended lower in the last session after another choppy day of trade, amid uncertainty ahead of key events later this week, including the U.K. election, the ECB meeting and former FBI Director James Comey's congressional testimony. The Asian markets have made a mixed start with some indices trading in red. There was cautiousness ahead of a barrage of events due in the next two days. The Indian markets declined in last session with traders taking a cautious bet ahead of the RBI's monetary policy decision. Today, the start is likely to remain cautious and all eyes will be on the Monetary Policy Committee (MPC), headed by RBI Governor Urjit Patel, meeting outcome with general view that the central bank is likely to hold key rates even as the government is making a case for a lower interest regime citing low inflation. Traders however may get some support with NITI Aayog CEO Amitabh Kant's statement that the Goods and Services Tax, to be rolled out next month as the biggest tax reform since independence, will help India achieve 9 percent growth rate. He said GST will simplify India's taxation system and help deal with tax evasion. Also, the Met Department has upgraded the South-West monsoon forecast to 98 per cent of the long-term average rainfall from 96 per cent earlier. Rainfall during the June-September monsoon season is expected to be normal, with a high possibility of all four broad geographical regions receiving evenly distributed rains. Meanwhile, the government has said that post the abolition of the FIPB, ministries will have to decide on FDI proposals within 60 days of the application and any rejection will need concurrence of the DIPP.

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

Nifty Top volumes

• ICICI Bank has commissioned over 200 solar powered ATM sites in the last one year.
• SBI will launch a planned share sale of as much as $2.3 billion as early as this week in order to raise funds through QIP from institutional investors.
• Competition Commission of India has approved the proposed merger of Telenor (India) Communications with Bharti Airtel.
• Dr. Reddy's Laboratories has launched Bivalirudin for Injection, 250 mg/vial, a therapeutic equivalent generic version of Angiomax (Bivalirudin) for Injection, approved by the USFDA.