Indian equity benchmarks, paring most of their early gains, managed to settle at new all time closing highs with modest gains on Tuesday. Markets started the day on optimistic note and extended their northward journey to attain crucial 31,800 (Sensex) and 9,800 (Nifty) bastions, as investors expect inflation for the month of June to be at record low which could lead to a rate cut in the next monetary policy review. According to a private report, easing further from May's 2.18%, Consumer price inflation (CPI) for June is predicted to cool to 1.70%, below the RBI's medium-term target of 4% for the eighth successive month. The CPI is slated to be announced tomorrow. Traders also took some encouragement with India Meteorological Department's (IMD's) statement that the seasonal monsoon rains have covered most of India and the amount of precipitation so far is within expectations, raising hopes for higher farm output after increased sowing of rice and soybean crops. Adding to the optimism, Revenue Secretary Hasmukh Adhia enlightened that the Goods and Services Tax (GST) will help bring down the inflation by one to two per cent by the end of this year. The secretary said that the government's objective is to ensure that inflation does not increase, and added that the government has tried to keep items frequently used by the consumers under the lower tax bracket. However, it was the last hour of trade which played spoil sports for the markets and traders opted to book most of their initial gains at higher levels. Meanwhile, IMF chief Christine Lagarde, warning against complacency in the current phase of global economic recovery has asked the members of G20 group, which includes India, to step up reforms by reducing trade barriers and subsidies to promote a level playing field. Finally, the BSE Sensex gained 31.45 points or 0.10% to 31,747.09, while the CNX Nifty was up by 15 points or 0.15% to 9,786.05.

The US markets closed mostly higher on Tuesday, with the Nasdaq extending its winning streak to a third session as a pair of political developments dominated the news cycle. Traders are also looking ahead to the start to the next earnings season. A day ahead of Federal Reserve Chair Janet Yellen's testimony to Congress on the state of the US economy, two of her colleagues cited low wage growth and muted inflation as reasons for caution on further interest rate increases. On the economy front, the number of job openings in the US fell sharply in May as companies hired the most people since 2004. Job openings fell by 301,000 in May to 5.66 million, just one month after reaching the second highest level ever, according to the government's job openings and labor turnover survey, known by its Job Openings and Labor Turnover Survey (JOLTS) acronym. Meanwhile, small-business sentiment fell again in June as business owners grew increasingly frustrated with Washington gridlock. The monthly sentiment tracker from the National Federation of Independent Business ticked down 0.9 points to 103.6, the fifth-straight month of declines or unchanged readings. The Dow Jones Industrial Average added 0.55 points to 21,409.07, the Nasdaq added 16.92 points or 0.27 percent to 6,193.31, while S&P 500 edged lower by 1.9 points or 0.08 percent to 2,425.53. 

Crude oil futures bounced back and rallied on Tuesday, after U.S officials lowered their domestic oil production outlook for next year. The Energy Information Administration cut the 2018 U.S. oil-output forecast by 1% to 9.9 mln bbls/day. Also, a report showed European product stockpiles fell despite an increase in refinery crude runs. European refineries increased their crude oil intake in June, but stocks of oil products, particularly diesel. Benchmark crude oil futures for August delivery added $0.64 or 1.4 percent to $45.04 on the New York Mercantile Exchange. In London, Brent crude for August delivery ended up by $0.84 or 1.8 percent at $47.72 a barrel on the ICE.

Snapping three days winning streak, Indian rupee ended modestly lower against dollar on Tuesday due to increased demand of the greenback from the importers and the banks. Investors failed to get solace with India Meteorological Department's (IMD's) statement that the seasonal monsoon rains have covered most of India and the amount of precipitation so far is within expectations, raising hopes for higher farm output after increased sowing of rice and soybean crops. Investors remained cautious ahead of key economic data-industrial production (IIP) and consumer price index (CPI) scheduled to be released tomorrow. On the global front, dollar mostly rose Tuesday, including hitting a four-month high against Japan's yen, and has now gained each trading day since the release of US jobs data backed expectations for another Federal Reserve interest-rate hike this year. Finally, the rupee ended at 64.58, 5 paise weaker from its previous close of 64.53 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 2301.25 crore against gross selling of Rs 2139.30 crore, while in the debt segment, the gross purchase was of Rs 2059.26 crore with gross sales of Rs 955.86 crore.

The US markets continued their lackluster trade and made another mixed closing in the last session, as traders remained reluctant to make significant moves ahead of Federal Reserve Chair Janet Yellen's semiannual testimony before Congress. The Asian markets have made a mixed start too and some of the indices are marginally in red as attention turned to central bank policy and the start of corporate earnings season in the US. The Indian markets despite paring most of their gains managed a modestly positive close in last session; traders turned cautious ahead of key macro data. Today, the start is likely to remain cautious amid mixed global cues and the traders will be eyeing the IIP and inflation data to be announced after the market hours today. Traders though will be getting some support with statement of Revenue Secretary Hasmukh Adhia that the Goods and Services Tax (GST) will help bring down the inflation by one to two percent by the end of this year. He also said that the government`s objective is to ensure that inflation does not increase, and added that the government has tried to keep items frequently used by the consumers under the lower tax bracket. There will be some buzz in the banking stocks on report that the finance ministry is gearing up to introduce a host of Bills, including the Banking Regulation (Amendment) Bill, repeal of State Bank of India (Subsidiary Banks) Act, 1959, among others, in the upcoming Monsoon Session. The aviation stocks too will see some action on a report from ICRA that the domestic air passenger traffic in India crossed the 10-million-mark (in a single month) for the first time in the history of Indian aviation during the month of May 2017.

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

Nifty Top volumes

• Oil and Natural Gas Corporation's overseas arm -- ONGC Videsh-- will bid in an upcoming auction to explore and develop gas fields off the coast of Lebanon.
• Lupin has entered into collaboration with the American Academy of Ophthalmology that would seek to expand and enhance continuing ophthalmic education in India.
• Maruti Suzuki India is planning to open standalone service outlets for its premium retail chain Nexa and will set up 300 of these by 2019-20.
• Tata Steel has signed a definitive sale agreement to sell its 42- and 84-inch pipe mills in Hartlepool to Liberty House Group.