Indian frontline equity indices prolonged the lull for yet another day and finished the session on a dull note, marginally below the neutral line, as investors at large remained reluctant to build long positions ahead of Fed Chairwoman Janet Yellen's semiannual testimony before Congress. The session largely remained characterized by choppiness as the aimless indices moved in tight-range throughout the day. Sentiments tuned dismal after Wholesale inflation shot up to a 30-month high of 5.25% in January as rising global crude oil prices spiked domestic fuel cost, even as food prices moderated. The overall inflation index of the fuel and power segment surged to 18.44% from 8.65% in the previous month. However, Retail inflation, measured in terms of Consumer Price Index (CPI), fell to a 5 year low of 3.17% in January mainly on account of declining prices of food items including vegetables and pulses. Although micro-indicators of inflation showed mixed picture, many experts believes that significant fall in CPI base inflation is result of demonetization and it will not maintain its current range, while WPI base inflation will increase if the crude oil prices continued to rise. Further, trading sentiments remained subdued with a private report that India's economic growth is likely to remain muted in the first quarter of this calendar year with the GDP likely to grow at 5.7% in the January-March period amid subdued activity. However, investor got some comfort with Finance Minister Arun Jaitley's statement that the Modi government's emphasis is on bold decision making and a clean economy with business friendly environment, the returns of which can be spent on the poor. On the global front, Asian markets ended mostly lower on Tuesday as investors turned jittery ahead of testimony by the head of the Federal Reserve, which could highlight the likelihood of two or more U.S. interest rate hikes this year. Back home, finally, the BSE Sensex declined by 12.31 points or 0.04% to 28339.31, while the CNX Nifty was down by 12.75 points or 0.14% to 8,792.30.

The US markets closed higher on Monday, for the fourth straight session to a record close after Federal Reserve Chairwoman Janet Yellen signaled that the central bank could gradually raise interest rates sooner rather than later. The Federal Reserve Chairwoman Janet Yellen left open the possibility of an interest-rate increase as early as the central bank's next policy meeting in March. Yellen said the Fed would depend heavily on US economic data to determine if the labor market continues to strengthen and inflation is moving up to the central bank's 2% target. Adding to the sense that a rate increase could come before too long, Yellen reiterated there is a risk of the Fed waiting too long to raise rates. She said it would be unwise to delay because it might require the central bank to eventually raise rates rapidly. On economy front, the National Federation of Independent Business's small-business index for January maintained its postelection surge as business owners remained optimistic about better economic prospects under President Donald Trump's administration. The Producer Price Index for January jumped by 0.6%, the largest rise since 2012, suggesting inflation may be heating up. The Dow Jones Industrial Average added 92.25 points or 0.45 percent to 20,504.41, the Nasdaq was up 18.61 points or 0.32 percent to 5,782.57, while S&P 500 gained 9.33 points or 0.40 percent to 2,337.58. 

Crude oil futures made some recovery on Tuesday and ended higher ahead of US inventory data. The API will report its figures for inventories at the end of last week later on Tuesday, while official data from the U.S. Energy Information Administration (EIA) is due on Wednesday. Last week, crude oil inventories in the U.S. jumped by 13.8 million barrels, inventories have been surging of late, and are expected to rise further. Meanwhile, the EIA has said that US oil production is projected to rise by 80,000 barrels a day in March at 4.873 million barrels per day. Benchmark crude oil futures for March delivery gained $0.27 or 0.51 percent to $53.20 on the New York Mercantile Exchange. In London, Brent crude for March delivery ended higher by 0.68 percent at $55.97 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. Investors took encouragement with the report that retail inflation based on Consumer Price Index (CPI) slumped to a series low of 3.17% in January, mainly due to fall in food prices, especially those of vegetables and pulses. Some support also came with Finance Minister Arun Jaitley's statement that the Modi government's emphasis is on bold decision making and a clean economy with business friendly environment, the returns of which can be spent on the poor. Besides, foreign fund inflows supported the rupee, but weak trade in domestic equity market capped the gain. On the global front, dollar stumbled against major currencies overseas after U.S. President Donald Trump's national security advisor Michael Flynn quit under scrutiny over whether he discussed the possibility of lifting U.S. sanctions on Russia before Trump took office. Finally, the rupee ended at 66.92, 9 paise stronger from its previous close of 67.01 on Monday.

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 3893.35 crore against gross selling of Rs 3575.50 crore, while in the debt segment, the gross purchase was of Rs 990.26 crore with gross sales of Rs 221.52 crore.

The US markets continuing their bull run reached new record highs in the last session, on the heels of Federal Reserve Chair Janet Yellen's semiannual monetary policy testimony before the Senate Banking Committee, where she hinted of rate hike. The Asian markets have made mostly a positive start led by the Japanese market that surged on weakness in yen after Janet Yellen said the Federal Reserve doesn't need to wait for the Trump's administration's plans on fiscal stimulus to hike rates. The Indian markets continued their consolidation mood and ended flat with a negative bias in last session after the provisional headline inflation rate based on WPI for January, shooting up to a 30-month high of 5.25 percent as rising global crude oil prices spiked domestic fuel cost. Today, the start is likely to remain cautious and markets may extend their consolidation mood with fear of US Fed's imminent rate hike in March. Traders however will get some support with India Ratings and Research (Ind-Ra) latest report that the Indian economy is likely to grow by 7.4 percent in the next fiscal year, however it has revised down GDP growth estimate for 2016-17 to 6.8 percent from 7.9 percent. Now traders will be eyeing the 10th meeting of the all-powerful GST Council this weekend, where a critical anti-profiteering clause in the draft Goods and Services Tax law to ensure that the benefit of lower taxes gets shared with consumers is likely to be finalized. There will be lots of result reactions to keep the markets buzzing during the day.

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

Nifty Top volumes

• Coal India is contemplating a major diversification as it plans to produce oil and gas from its coal in a big way as growth from its core activity is declining.
• Adani Ports and SEZ has reported 25.83% rise in its consolidated net profit at Rs 849.75 crore for the quarter ended December 31, 2016, as compared to Rs 675.32 crore for the same quarter in the previous year. 
• Sun Pharma has reported 4.73% fall in its consolidated net profit at Rs 1471.82 crore for the quarter ended December 31, 2016, as compared to Rs 1544.85 crore for the same quarter in the previous year.
• BHEL has launched remote controlled weapon station for the Indian Army's Arjun tanks at Aero India.
• Tata Motors has reported 96.22% fall in its consolidated net profit at Rs 111.57 crore for the quarter ended December 31, 2016, as compared to Rs 2952.67 crore for the same quarter in the previous year.