Indian equity bourses paused gaining rally on Tuesday, with Sensex & Nifty losing around 50 and 25 points, respectively. After firm start, key indices soon turned volatile, impacted by SBI's report stating that India's Gross Domestic Product growth is likely to slow further in the July-September quarter of this financial year to below 5 per cent amid decline in consumption, weak investments and an under-performing service sector. Adding more worries, ICRA said bank credit growth is likely to slow down sharply to 8-8.5 percent during current financial year as compared to 13.3 percent in FY19, mainly due to decline in incremental credit in the first half of FY20. Bourses extended their losses in noon deals, after India's services sector activity contracted for second straight month in October. The seasonally adjusted Nikkei Services Business Activity Index stood at 49.2 in October from 48.7 in September. Some concerns also came with reports that the CBI is conducting searches in 169 locations across the country in connection with 35 bank fraud cases registered by the agency involving funds of over Rs 7,000 crore. However, in last leg of the trade, indices came off their day's low points, amid report that India is expected to see M&A deals of over $52 billion in 2019 as mergers and acquisitions in the country are expected to remain stable despite global headwinds. Finally, the BSE Sensex lost 53.73 points or 0.13% to 40,248.23, while the CNX Nifty was down by 24.10 points or 0.20% to 11,917.20.

The US markets ended mostly higher on Tuesday, with the Dow Jones Industrial Average and Nasdaq ending the day at record highs, amid continued optimism about a potential US-China trade deal, with President Donald Trump and Chinese President Xi Jinping widely expected to sign phase one of an agreement sometime this month. As part of the deal, the US is likely to scrap tariffs on about $156 billion worth of Chinese imports currently set to take effect on December 15. A private report said the US is also considering China's request to lift the 15 percent tariff on about $125 billion worth of Chinese goods that went into effect on September 1. Besides, the strength on markets also came as investors welcomed better-than-expected data on the service sector. The Institute for Supply Management (ISM) said its non-manufacturing index climbed to 54.7 in October from 52.6 in September, with a reading above 50 indicating growth in the service sector. Street had expected the index to inch up to 53.2. The bigger than expected increase by the headline index came as the business activity index rebounded to 57.0 in October from 55.2 in September and the new orders index jumped to 55.6 from 53.7. The employment index also showed a notable increase, surging up to 53.7 in October from 50.4 percent in September and indicating a reacceleration in the pace of job growth in the service sector. Meanwhile, a report released by the Commerce Department showed the US trade deficit narrowed in the month of September, as the value of imports slumped by more than the value of exports. The Commerce Department said the trade deficit narrowed to $52.5 billion in September from a revised $55.0 billion in August. The narrower deficit matched Street estimates. The deficit shrank as the value of imports tumbled by 1.7 percent to $258.4 billion in September after climbing by 0.5 percent to $262.9 billion in August. The report showed a steep drop in imports of consumer goods, including cell phones and other household goods, as well as notable decreases in imports of capital goods and automotive vehicles, parts, and engines.

Crude oil futures extended recent gains and ended higher with gains over one percent on Tuesday on optimism over China-US trade talks. Reports said that the US might roll back tariffs on $112 billion worth of Chinese imports as a concession to seal a phase one trade deal was credited with buoying sentiment across markets. Besides, the Organization of the Petroleum Exporting Countries (OPEC) said it expects oil supplies to fall continuously over the next five years, indicating the cartel might need to further cut output to stabilize prices on the back of a US production boom and sluggish oil demand. OPEC and its allies are set to debate whether to continue current production cuts of 1.2 million barrels a day or deepen the reductions when they meet in early December. Benchmark crude oil futures for December surged 69 cents or 1.2 percent to settle at $57.23 a barrel on the New York Mercantile Exchange. January Brent rose 83 cents or 1.3 percent to settle at $62.96 a barrel on London's Intercontinental Exchange.

Indian rupee ended marginally higher on Tuesday on selling of dollars by banks and exporters. Local currency got some support with report that India is expected to see M&A deals of over $52 billion in 2019 as mergers and acquisitions in the country are expected to remain stable despite global headwinds. However, further upward move got restricted with SBI report stating that India's Gross Domestic Product (GDP) growth is likely to slow further in the July-September quarter of this financial year to below 5 per cent amid decline in consumption, weak investments and an under-performing service sector. On the global front, US dollar advanced against the yen on Tuesday thanks to growing optimism the United States and China are on the verge of reaching a preliminary agreement to scale back their bruising trade war. Finally, the rupee ended at 70.69, 8 paise stronger from its previous close of 70.77 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 5546.64 crore against gross selling of Rs 5465.54 crore, while in the debt segment, the gross purchase was of Rs 1572.48 crore with gross sales of Rs 534.62 crore. Besides, in the hybrid segment, the gross buying was of Rs 7.82 crore against gross selling of Rs 4.11 crore.

The US markets ended mostly in green on Tuesday amid continued optimism about a potential US-China trade deal. Asian markets are trading mostly lower on Wednesday as investors awaited new developments toward scaling back a bruising trade war between the United States and China. Indian markets ended choppy trading session slightly in red on Tuesday amid concerns the government will have a tough job maintaining its fiscal deficit target for the year. Today, the markets are likely to make slightly negative start tacking weakness in Asian peers and continued rise in crude oil prices. There will be some cautiousness with a private report that the government may discontinue spending on 200-odd schemes in order to stick to its fiscal deficit target of 3.3 percent. However, some respite may come later in the day with Finance minister Nirmala Sitharaman's statement that the government will soon use its strong electoral mandate to usher in the next wave of reforms, and not to miss the bus this time. Meanwhile, the Securities and Exchange Board of India (SEBI) has issued operational guidelines for foreign portfolio investors (FPI) regulations notified in September. The regulator said that all existing FPIs registered as category III FPIs under the 2014 regulations shall be deemed to have been registered as Category II FPIs under the new regulations. Besides, the base year for gross domestic product, or GDP, will be revised in few months to capture the changing economic scenarios in India and abroad. There will be some buzz in the reality stocks with Finance Minister Nirmala Sitharaman's statement that the government and Reserve Bank are working to resolve the issues being faced by realty sector. Textile stocks will be in focus as ICRA maintained a negative outlook on the domestic cotton with pressures building up on credit profiles of domestic cotton spinners as they continue to grapple with challenges on the demand front. There will be some reaction in Jewelry stocks with the World Gold Council's (WGC) statement that India's gold demand is expected to fall to its lowest level in three years in 2019, as domestic prices climb to a record against a backdrop of falling earnings in rural areas, a key source of custom for the precious metal. Also, sugar stocks will be in limelight as the government announced that a environmental clearance would not be required to produce additional ethanol from sugarcane juice as it does not cause pollution, a move that may benefit farmers and the cash-strapped sugar mills.

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

Nifty Top volumes

• M&M is recalling a limited batch of XUV300 vehicles to fix a faulty suspension component. 
• Tech Mahindra has received approval to acquire 100% stake in Burn Group directly and indirectly through its wholly owned subsidiary viz. Tech Mahindra (Singapore).
• Tata Steel's step-down subsidiary -- NatSteel Holdings Pte has agreed to divest its entire 56.5% stake in NatSteel Vina for about Rs 36 crore to a Vietnam-based Thai Hung Trading Joint Stock Company.   
• ZEE5, a video on demand website run by Zee Entertainment Enterprises, has unveiled a unique tool PLAY5 which will let brands engage with their consumers through innovative and interactive experiences.