Indian benchmark indices failed to extend the gains on Tuesday as jittery investors chose to take profits off the table amid weak global cues. An explosion struck an Ariana Grande concert in northern England late yesterday, killing at least 19 people and injuring dozens. Britain's terrorist threat level has been set at ‘severe' in recent years, indicating an attack is highly likely.  The sentiment was also dragged down by geopolitical tensions as Indian army strikes Pakistan military posts. Indian Army spokesperson Major General Ashok Narula said Pakistan Army has been supporting armed infiltration in Kashmir and targeted attacks have been carried out to put an end to such activities. Sentiments also remained dismal with India Ratings and Research's (Ind-Ra) latest report indicating that Goods & Service Tax (GST) implementation will affect the working capital cycle of business in the initial phase owing to the lock up of input credit. It noted that easy liquidity in the system is essential to minimise the magnitude of such disruption at the earliest and to absorb the sudden changes in requirement of short term finance. Furthermore, with the prices of crude oil starting to recover, investors remained concerned over the report that India's petroleum self-sufficiency fell to 17.9% in 2016-17, its lowest annual level since 2011. The self-sufficiency percentage is calculated by using the total production from Indigenous Crude & Condensate and the total petroleum consumption of the country. For the month of April, this percentage fell further to 16.6%, lower from 17.9% seen for the month of April 2016. India's fast-growing demand for petroleum products has been the significant contributor to the fall in its self sufficiency in meeting these demands. Investors failed to get any sense of relief with a new survey by the Confederation of Indian Industries (CII) and Indian Bank's Association (IBA) showing that the outlook towards the financial condition of the country has taken a positive turn during the first quarter of the ongoing fiscal. The CII-IBA Financial Conditions Index stood at 56.9 for first quarter of 2017-18, as compared to 48 during the previous quarter. Finally, the BSE Sensex lost 205.72 points or 0.67% to 30365.25, while the CNX Nifty was down by 52.10 points or 0.55% to 9,386.15.   

The US markets closed higher on Tuesday, marking a fourth straight session in the green following the White House's release of its 2018 budget proposal. The White House is seeking to slash federal spending by $3.6 trillion over the next decade through steep cuts across most agencies and tough new restrictions on aid to the poor - a dramatic rethinking of the role of government in the American economy. Defense is one of the few areas slated for increased funding. On the economy front, a pair of surveys of American businesses in May showed the US economy is still growing steadily, though manufacturers that provide many blue-collar jobs have cooled off in the past few months. IHS Markit said its manufacturing PMI slipped to 52.5 this month from 52.8, marking an eight-month low. Manufacturers saw a surge that began late last year and continued through early 2017 before easing up more recently. Lately companies have slowed production to avoid excess inventory buildups. Meanwhile, sales of newly constructed homes stumbled in April, as builders retreated after a March surge that marked the strongest selling pace in a decade. New-home sales ran at a seasonally adjusted annual rate of 569,000. The Dow Jones Industrial Average gained 43.08 points or 0.21 percent to 20,937.91, Nasdaq added 5.09 points or 0.08 percent to 6,138.71, while S&P 500 edged higher by 4.4 points or 0.18 percent to 2,398.42.

Crude oil futures moved further high and reached a five-week high on Tuesday, ahead of U.S. inventories data that may show stockpiles continued to dwindle from record levels. Traders overlooked the Goldman Sachs report downgrading the energy sector amid concerns that rig count growth will "flatten out" over the next few years. However, there was some concern too ahead of the Organization of the Petroleum and Exporting Countries meeting later this week. As, Kuwaiti Oil Minister Issam Almarzooq said some countries are not in favour of a nine-month extension, but there's a preliminary agreement on a six-month deal that will be reviewed in November. Benchmark crude oil futures for June delivery ended higher by $0.34 or 0.7 percent to $51.47 on the New York Mercantile Exchange. In London, Brent crude for July delivery ended up by $ 0.32 to $54.19 on the ICE.

Snapping two-day winning streak, Indian rupee ended considerably weaker against the US dollar on Tuesday due to dollar demand from banks and importers. Rupee sentiment was hit by geopolitical tensions as Indian army strikes Pakistan military posts. Sentiments also remained subdued with India Ratings and Research's latest report indicating that GST implementation will affect the working capital cycle of business in the initial phase owing to the lock up of input credit. Besides, weak trade in the domestic equity market too kept pressure on the domestic unit. Finally, the rupee ended at 64.89, 34 paise weaker from its previous close of 64.55 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 5360.40 crore against gross selling of Rs 4465.52 crore, while in the debt segment, the gross purchase was of Rs 807.56 crore with gross sales of Rs 114.54 crore.

The US markets despite a lackluster day of trade managed to end modestly higher in the last session, with the major averages extending their gains for the fourth straight session. Stocks continued to benefit from the upward momentum seen in recent days though there was some cautiousness ahead of tomorrow's release of the minutes of the latest Federal Reserve meeting. The Asian markets have made a mixed start and the Chinese markets were trading in red after Moody's Investors Service cut its rating on the country's debt, saying the outlook for its financial strength will worsen. The Indian markets giving up their mid day recovery slumped in last session and the major averages deposed over half a percent for the day, slipping below their crucial levels. Today the start of the penultimate session of the F&O expiry is likely to be flat to mildly in red and the trade will be impacted by the ongoing geo-political tension and the material stocks will be under pressure with China's debt rating cut by Moody's. Also, the Australian weather office has said that El Nino still has a 50 per cent chance of developing later this year, though all international models say if it develops, it will be weak. Traders may get some support with Prime Minister Narendra Modi's statement that our aim is that India must be an engine of growth as well as an example in climate friendly development in the years to come. There will be some action in financial sector stocks on buzz that the government is likely to introduce in the monsoon session of Parliament a separate bankruptcy law to deal with insolvency in financial sector companies that include banks and NBFCs. The DTH and cable services provider companies too may see some upmove as the government has said that taxation on entertainment, cable and DTH services shall come down under the Goods and Services Tax regime as the 'entertainment tax' levied by states has been subsumed in the GST. There will be lots of important earnings announcements too, to keep the markets in action.

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

Nifty Top volumes

• TCS has unveiled 'TCS iON Education Solution', an integrated cloud-based solution for academic and vocational institutions, in Japan.
• Tata Power's Renewable business registered a healthy profit while surpassing the 2000 MW operating capacity mark with another about 500 MW under construction.
• Tata Motors' owned -- Jaguar Land Rover has launched new diesel variant of Jaguar XE sedan at a starting price of Rs 38.25 lakh.
• Maruti Suzuki India's hatchback Swift has emerged as the best selling model compared to sibling Alto in April this year in the domestic market.