Bears made strong comeback on Dalal Street on Monday after two days of halt, with frontline gauges ending below their crucial 37,600 (Sensex) and 11,400 (Nifty) levels. Markets started the session on pessimistic note and never looked in recovery mood to end near intraday low levels. Sentiments remained dampened since beginning, as traders remained concerned with report that foreign exchange reserves fell below $400 billion, for the first time since November 11, 2017, in the first week of September. As on September 7, foreign exchange reserves stood at $399.28 billion, a result of the Reserve Bank of India's intervention at a time when portfolio flows were witnessing some reversals. Some cautiousness also crept in with ICRA's report that funding of farm loan waivers, poll-related spending and other populist measures are likely to ensure that states are set to miss their fiscal consolidation targets budgeted at the beginning of the year. The market got hit with another private report stating that India's world-beating stock market run is over. It has downgraded domestic stocks to the equivalent of a hold rating from buy. This is the first time it has lowered Indian stocks since 2014. Markets extended losses in last leg of trade, as market participants took a note of private report stating that ahead of the festive season, the surge in petrol rates has left consumers scrambling and cutting household expenses to adjust with the price hike. Traders shrugged off report that India's exports rose at the fastest pace in three months to reach $27.84 billion in August on account of healthy growth in petroleum products, engineering, pharma, and gems and jewellery shipments. Besides, trade deficit during the month narrowed to $17.4 billion as against $12.72 billion in the same month last year. In July, the trade deficit soared to a near five-year high of $18.02 billion. Traders failed to take any sense of relief with Finance Minister Arun Jaitley's statement that that the government is confident of meeting its fiscal deficit target of 3.3% of gross domestic product (GDP) in the fiscal year 2018-19. He added that the government is sure of meeting the fiscal deficit target given robust tax collections. Finally, the BSE Sensex declined by 505.13 points or 1.33% to 37,585.51, while the CNX Nifty was down by 137.45 points or 1.19% to 11,377.75.

The US markets ended in red terrain on Monday giving back ground after moving notably higher last week. Sentiments remain dampened throughout the day on lingering trade concerns, with stocks seeing further downside after President Donald Trump said an announcement on trade with China would be made after the close of trading. Recent reports have said Trump intends to proceed with plans to impose tariffs on $200 billion worth of Chinese goods. A private report said the new tariffs would bet set at 10 percent, lower than the 25 percent previously floated by the administration. The threat of new tariffs could still lead China to decline an offer to hold high-level trade talks. China has pledged to retaliate to any new tariffs imposed by the U.S., with reports suggesting the communist country could go beyond raising tariffs on U.S. imports and restrict exports of goods critical to U.S. manufacturing. On the economic front, the New York Federal Reserve released a report showing a bigger than expected slowdown in the pace of growth in regional manufacturing activity in the month of September. The New York Fed said its general business conditions index fell to 19.0 in September from 25.6 in August, although a positive reading continues to indicate growth in regional manufacturing activity. The index had been expected to dip to 23.0. Dow Jones Industrial Average declined 92.55 points or 0.35 percent to 26,062.12, the S&P 500 lost 16.18 points or 0.56 percent to 2,888.80 and Nasdaq was down by 114.25 points or 1.43 percent to 7,895.79.

Crude oil futures ended lower with marginal losses on Monday as investors focused on deepening trade tension between the US and China that is expected to dent global crude demand. But, losses remained capped as some support came with report that threat of disruptions to supply from US sanctions on Iranian oil. Sanctions against Iran, the third largest Organization of Petroleum Exporting Countries (OPEC) producer of oil, are expected to directly hurt its global crude exports. Benchmark crude oil futures for October declined 8 cents or 0.1 percent to settle at $68.91 a barrel on the New York Mercantile Exchange. November Brent crude fell 4 cents or 0.05% to settle at $78.05 a barrel on London's Intercontinental Exchanged.

Snapping previous session's gains, Indian Rupee depreciated drastically against the American currency on Monday. Traders remain concerned with report that foreign exchange reserves fell below $400 billion, for the first time since November 11, 2017, in the first week of September. As on September 7, foreign exchange reserves stood at $399.28 billion, a result of the Reserve Bank of India's intervention at a time when portfolio flows were witnessing some reversals. Rupee sentiments were also hit with private report stating that ahead of the festive season, the surge in petrol rates has left consumers scrambling and cutting household expenses to adjust with the price hike. Besides, feeble trading of domestic equity markets too weighed on rupee. On the global front, the dollar fell on Monday as investors cautiously waited for the next salvo in the trade war between the United States and China. Finally, the rupee ended at 72.49, 63 paise weaker from its previous close of 71.86 on Friday.

The FIIs as per Monday'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 7246.51 crore against gross selling of Rs 6566.74 crore, while in the debt segment, the gross purchase was of Rs 528.67 crore with gross sales of Rs 996.78 crore. Besides, in the hybrid segment, the gross buying was of Rs 0.76 crore against gross selling of Rs 0.09 crore.

The US markets ended lower on Monday as lingering trade concerns weighted on the sentiments. Markets extended losses after President Donald Trump said an announcement on US-China trade will be coming after the close of trading. Asian markets were trading mixed in early deals on Tuesday following an escalation in trade tensions between the US and China. Snapping two-day winning streak, the Indian markets ended Monday's session with cut of over a percent as measures outlined by the government on Friday to stem the steep decline in the rupee failed to cheer markets amid a weak trend in other Asian markets. Today, the markets are likely to make pessimistic start amid weak global cues. Traders will be concerned with report that in an escalation to the trade war with China, US President Donald Trump announced imposition of new tariffs on additional $200 billion worth of Chinese imports. On the domestic turf, there will be some cautiousness with International Monetary Fund (IMF) estimates that the real effective depreciation of Indian rupees is between 6-7% compared to December 2017. It said broadly since the beginning of the year, Indian rupee has lost about 11% of its value in nominal terms vis-a-vis the US dollar. However, traders may get some encouragement later in the day with CBDT Chairman Sushil Chandra expressing confidence in exceeding Rs 11.5 lakh crore direct tax collection target in current fiscal. There may some support with report that Markets regulator SEBI has relaxed initial public offer (IPO) norms to allow companies to announce the price band two days before an offering. Meanwhile, the government will further extend the deadline for the imposition of higher customs duties on 29 products, including almond, walnut and pulses, imported from the US. There will be some buzz in the banking sector stocks with India Ratings' mid-year outlook showing that banks are witnessing a spurt in asset quality stress in the non-corporate segment and the overall loan loss provisions for lenders are expected to stay elevated till fiscal year 2019-20. Also, there will be some reaction in copper related sector stocks with report that India has initiated an anti-subsidy probe into increased imports of select copper wire rods from Indonesia, Malaysia, Thailand and Vietnam.

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

Nifty Top volumes

• Tata Steel has launched an ambitious project to significantly extend the operational life of one of the two huge blast furnaces of its UK's largest steelworks at Port Talbot in South Wales. 
• Reliance Industries' telecom arm -- Reliance Jio Infocomm and Micromax have bagged Rs 1,500 crore order from the Chhattisgarh government to distribute 50 lakh smartphones to women and students in the state. 
• Hindalco Industries is planning to raise Rs 6,000 crore through issue of Non-Convertible Debentures on private placement basis. 
• Infosys has made an additional investment of $1.5 million through the Infosys Innovation Fund in TidalScale Inc., the company at the heart of the Software-Defined Server revolution.