Indian benchmarks witnessed yet another volatile day of trade ahead of the September F&O expiry scheduled on Thursday. The optimism in domestic markets petered out completely by the end of trade and the benchmarks even drifted in to the negative territory to complete a hat-trick of negative close despite getting off to a positive opening. Sentiments remained subdued with WTO estimates showing that world trade will grow more slowly than expected in 2016, expanding by just 1.7%, well below the April forecast of 2.8%. The forecast for 2017 has also been revised, with trade now expected to grow between 1.8% and 3.1%, down from 3.6% previously. Besides, uncertainty about the US election outcome has made global markets risk-averse. Investors from domestic markets are also looking ahead to the Reserve Bank of India's rate-setting meeting on October 4, amidst the backdrop of declining retail inflation. However, investors got some comfort with statement of Ravindra Dholakia, one of the three government appointees to the newly formed Monetary Policy Committee (MPC) that there will be no tug of war in the MPC. Some support also came with the report that the government is working on a bouquet of reforms to play to the country's core strengths of technology, leisure travel and medical tourism.  The commerce department has circulated a cabinet note on domestic reforms to enhance earnings from services exports, detailing measures that can be implemented after due deliberations. Meanwhile, buying was observed in selected oil & gas counters on Moody's Investors Service's report that  India's petroleum consumption will grow at 6 percent in 2017-18, double the rate at which fuel demand in China is projected to grow. On the other hand, telecom stocks like Bharti Airtel, Idea Cellular and MTNL came under selling pressure after telecom regulator TRAI said it will slap show cause notices on operators for call drops that are far exceeding the norm. Finally, the BSE Sensex declined by 70.58 points or 0.25% to 28223.70, while the CNX Nifty dropped 16.65 points or 0.19% to 8,706.40.

The US markets closed higher on Tuesday, with the Dow industrials rising more than 100 points after the first presidential debate between Democratic candidate Hillary Clinton and Republican contender Donald Trump and reacting to a number of stronger-than-expected economic reports. The advance in stocks suggests that US equity markets are betting that Clinton benefited the most from Monday's presidential debate. Stocks are rising on the prospect of a Clinton presidency because the Democrat is viewed as a known quantity while some view Trump as being more unpredictable - a bad thing for stock investors. On the economy front, Americans in September expressed the most optimism about the economy since the summer of 2007, reflecting a sunnier view about the US labor market. The index of consumer confidence climbed to 104.1 this month from 101.8 in August. Consumers were more upbeat about employment conditions. The nation's unemployment rate has fallen below 5% and millions of people have found jobs in the past several years. The Dow Jones Industrial Average added 133.47 points or 0.74 percent to 18,228.30, Nasdaq gained 48.22 points or 0.92 percent to 5,305.71, while S&P 500 was up 13.83 points or 0.64 percent to 2,159.93. 

Crude oil futures suffered sharp slump on Tuesday, as OPEC dithered on a possible output cut. Saudi Arabia and Iran dashed market hopes that the two major OPEC producers would find a compromise this week at meeting in Algiers to help ease a global glut of crude. Saudi Energy Minister Khalid al-Falih said that he did not expect an agreement to come out of the consultations on the last day of the meet. OPEC plans to discuss Wednesday a proposal that would cut almost 1 million barrels a day of global production over one year. Benchmark crude oil futures for October delivery slumped by $1.26 or 2.7 percent to close at $44.67 a barrel on the New York Mercantile Exchange. In London, Brent oil futures for November delivery declined by $1.38 or 2.9 percent to $45.97 a barrel on the ICE.

Indian rupee strengthened further on Tuesday, maintaining its upward trend for the fourth straight day on sustained selling of the US currency by exporters and banks and also tracking the gains in its Asian peers. The currency in the region strengthened, as Hillary Clinton was seen as outperforming Donald Trump in the first US presidential debate, improving risk sentiments. The domestic currency made a positive start and was supported by good gains in the equity markets, though the stock markets pared gains, rupee remained firm and ended with good gains. On the global front, the dollar held steady against the other major currencies on Tuesday, on the other hand the pound edged lower. Finally, the rupee ended at 66.48, 13 paise stronger from its previous close of 66.61 on Monday.

The FIIs as per Tuesday's data were net sellers in equity segment, while they were net buyers in debt segment. In equity segment, the gross buying was of Rs 4413.60 crore against gross selling of Rs 4557.21 crore, while in the debt segment, the gross purchase was of Rs 1764.25 crore with gross sales of Rs 636.13 crore.

The US markets made a smart recovery and major bourses moved notably higher ion last session after getting report from the Conference Board, showing an unexpected improvement in US consumer confidence in the month of September. The Asian markets have made mostly a lower start led by the Japanese market which is down by over a percent as the oil slumped and hopes increased of a rate hike after the good economic data from US. The Indian markets losing their strength in final hours declined by about a quarter percent in last session. Today, the start of the penultimate session of the F&O expiry is likely to be cautious on weak regional cues, however the trade is likely to turn volatile as the trade progress. Marketmen will be getting some support with Finance Minister Arun Jaitley's statement that the government is confident of meeting the April 2017 target to implement the Goods and Services Tax as state finance ministers cooperate to make the single tax reform a reality soon. Also, as per latest edition of the Global Competitiveness Index of World Economic Forum (WEF) India has become the second most competitive BRICS economy and will grow faster than China this year. The report showed India's competitiveness improved the fastest in 2015-16, jumping 16 places to rank 39th among 138 countries on the index. Meanwhile, the tax department came up with two more draft rules and their formats on GST returns and refunds requiring assessees to file monthly returns and specifying procedure for claiming refunds of taxes, interest and fees. There will be some buzz in infra sector stocks, as the Finance Minister Arun Jaitley has said that the deficit in the infrastructure sector was still 'very large' and stressed the need for investment to pick up in the sector. The oil marketing companies will be in action on sharp plunge in crude oil prices.

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

Nifty Top volumes

• Yes Bank will raise Rs 330 crore (through an issue of a 7-year Green Infrastructure Bonds to FMO, the Dutch Development Bank, on a private placement basis.
• NTPC is planning to raise $500-700 million through masala bonds from the financial markets in London, Hong Kong and Singapore from November.
• Tata Motors has forayed into the Bolivian commercial vehicle market, through a distribution agreement with local partners.
• M&M has introduced DiGiSENSE, a revolutionary connected vehicle technology solution in its small commercial vehicles Jeeto and Imperio.
• Tech Mahindra has unveiled its latest Network Services Strategy which will enable communication service providers to transform and modernize their networks faster.