In a volatile session, Indian equity benchmarks erased all of the day's gains and ended near day's low point with losses of over a percent on Tuesday, as sharp selling pressure in Telecom and Banking stocks dragged the markets lower. After making slightly positive start, equity gauges turned cautious, as the World Bank said that India's economy will shrink by 3.2 percent in the current fiscal, as it joined a chorus of international agencies that are forecasting a contraction in growth rate due to the coronavirus lockdown halting economic activity. But, markets soon gained traction and traded in fine fettle as traders took encouragement with the Reserve Bank of India (RBI) proposed a comprehensive framework for sale of loan exposures, which could be standard, sub-standard or non-performing assets (NPAs), as part of the overall exercise to deepen the market for lending. Some optimism also came as Finance Minister Nirmala Sitharaman said the government will consider an extension in the deadline for availing the lower 15 percent corporate tax rate on new investments, due to the COVID-19 pandemic. However, markets failed to hold on to gains and slipped into red terrain in the final hour of trade, as traders turned wary with global rating agency S&P Global Ratings in its report titled 'Financial Conditions Reflect Optimism, Lockdown Fatigue Emerges', stating that Indian economy is likely to shrink 5 per cent in the current fiscal, saying the fiscal stimulus worth 1.2 per cent of GDP will not be enough to provide significant growth support. Selling further crept in as global ratings agency Moody's Investors Service said that India's sovereign rating downgrade has created six fallen angels, or companies in the non-financial sector whose ratings have dipped to just one notch away from being considered junk. Companies that move from investment grade category to sub-investment grade are sometimes referred as Fallen Angels. Finally, the BSE Sensex lost 413.89 points or 1.20% to 33,956.69, while the CNX Nifty was down by 120.80 points or 1.19% to 10,046.65.

The US markets ended mostly lower on Tuesday on account of profit booking as traders cashed in on the strong gains posted in recent sessions. Selling pressure was somewhat subdued, however, with stocks holding on to the bulk of their recent gains as traders generally remain optimistic about a quick economic recovery. Traders also seemed reluctant to make more significant moves ahead of the Federal Reserve's monetary policy announcement. The Fed is not expected to announce any significant policy changes, although traders are still likely to pay close attention to the central bank's assessment of the economic outlook. On the economic data front, wholesale inventories in the US increased by slightly less than expected in the month of April, according to a report released by the Commerce Department. The Commerce Department said wholesale inventories rose by 0.3 percent in April after tumbling by a revised 1.1 percent in March. Street had expected wholesale inventories to rise by 0.4 percent compared to the 0.8 percent slump originally reported for the previous month. The rebound in wholesale inventories came as inventories of non-durable goods surged up by 1.1 percent in April after plunging by 3.4 percent in March. Meanwhile, the report said inventories of durable goods fell by 0.3 percent in April after rising by 0.4 percent in the previous month. The Commerce Department also said wholesale sales plunged by 16.9 percent in April after tumbling by 5.1 percent in March.

Crude oil futures gave up earlier losses to finish higher on Tuesday with expectations for a rebound in energy demand among the reasons. Meanwhile, the Bureau of Safety and Environmental Enforcement reported that 31% of US Gulf of Mexico oil production remained offline. That is only a slight improvement from 34% a day earlier. However, oil prices drifted down earlier in the session after Saudi Arabia said that the kingdom and its Gulf allies Kuwait and the United Arab Emirates are unlikely to extend additional output reductions. Crude oil futures for July rose 75 cents or 2 percent to settle at $38.94 a barrel on the New York Mercantile Exchange. August Brent crude gained 38 cents or 0.9 percent to settle at $41.18 a barrel on London's Intercontinental Exchange.

Indian rupee pared initial gains to close marginally down against the US dollar on Tuesday due to fresh demand for the American currency from banks and importers. Traders remain concerned with the World Bank's statement that India's economy will shrink by 3.2 percent in the current fiscal, as it joined a chorus of international agencies that are forecasting a contraction in growth rate due to the coronavirus lockdown halting economic activity. Also, S&P Global Ratings said Indian economy will shrink 5 per cent in the current fiscal, saying the fiscal stimulus worth 1.2 per cent of GDP will not be enough to provide significant growth support. Broad strength in US dollar also weighed on the rupee. On the global front, dollar found some footing on Tuesday, rising against tearaway commodity currencies for the first time in June as investors paused to take profits. Finally, the rupee ended at 75.61, 6 paise weaker from its previous close of 75.55 on Monday.

The FIIs as per Tuesday's data were net buyers in equity segment, while they were net sellers in debt segment. In equity segment, the gross buying was of Rs 6339.57 crore against gross selling of Rs 5286.73 crore, while in the debt segment, the gross purchase was of Rs 251.21 crore with gross sales of Rs 286.01 crore. Besides, in the hybrid segment, the gross buying was of Rs 0.62 crore against gross selling of Rs 0.82 crore.

The US markets ended mostly lower on Tuesday as traders cashed in on the strong gains posted in recent sessions. Asian markets are trading mostly higher on Wednesday ahead of the release of Chinese inflation data for May. Indian markets gave up intraday gains and ended sharply lower on Tuesday as markets succumbed to heavy selling pressure in the last hour of trade amid weak cues from European markets. Today, the start of session is likely to be optimistic following Asian peers. Traders will be getting some encouragement with the Department for Promotion of Industry and Internal Trade' (DPIIT) data showing that Cayman Islands has emerged as the fifth largest investor in India, with foreign direct investment (FDI) from the nation increasing over three-fold to $3.7 billion in 2019-20. Some support will also come with report that the Ministry of Corporate Affairs (MCA) has amended the Companies (Share Capital and Debentures) Rules, 2014, to allow startups to issue sweat equity shares not exceeding 50 per cent of its paid-up capital up for a decade after the registration of the firm. Traders may take note of report that sectors expected to lead the job market in the third quarter (July-August-September 2020) of the current calendar year are mining & construction, finance, insurance and real estate. Though, there may be some cautiousness with report that the total number of coronavirus cases in India has jumped to 276,146, while 7,473 people have died from the disease so far. Now only a notch behind the UK in terms of number of confirmed coronavirus, India at present is the fifth-most-affected country. Meanwhile, markets regulator SEBI has eased norms related to fast track further public offers, including reducing the minimum average market capitalisation of public shareholding requirement, till March next year. There will be some buzz in the insurance companies stocks with IRDAI's report that the nationwide lockdown due to the coronavirus outbreak that began on March 25 continued to have an impact on the new premium collections of life insurers with first-year collections down 25.4 percent year-on-year (YoY) to Rs 13,739.01 crore in May 2020. Auto stocks will be in focus with rating agency Ind-Ra's report that the automobile sales may decline by up to 25 percent in this financial year as compared to 2019-20 due to a complete washout in April and minuscule sales last month. There will be some reaction in aviation stocks with Global airlines body IATA's statement that airlines across the world are expected to lose $84.3 billion in 2020 due to the coronavirus pandemic, calling it the worst year in the history of aviation.

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

Nifty Top volumes

• Maruti Suzuki India has joined hands with Mahindra Finance to ease the finance availability for customers looking at personal mobility solutions during ongoing COVID-19 pandemic. 
• Coal India's subsidiary -- Western Coalfields has opened three new coal mines in states of Maharashtra and Madhya Pradesh. 
• Tata Consultancy Services is expecting an increase in demand for its artificial intelligence product Ignio, as more people work from home. 
• Vedanta has pruned its aluminium Cost of Production by 20 per cent year-on-year to $1451 per tonne.