The benchmark indices ended a tad above the flat line on Tuesday. IT shares bucked weak broader sentiment. The S&P BSE Sensex, rose 31.71 points or 0.08% at 40,625.51. The Nifty 50 index added 3.55 points or 0.03% at 11,934.50.

Reliance Industries (up 1.95%), Infosys (up 2.27%) and Kotak Mahindra Bank (up 2.40%) supported the indices while ICICI Bank (down 1.91%), HDFC Bank (down 1.26%) and HDFC (down 1.17%) dragged.

The gains were capped as India's retail inflation in September rose above the RBI's comfort level, while industrial output continued to contract in August, official data showed on Monday. The RBI MPC has given the mandate to maintain annual inflation at 4% until 31 March 2021, with an upper tolerance of 6% and a lower tolerance of 2%. Negative global stocks also put pressure domestic indices.

The broader market declined. The BSE Mid-Cap index fell 0.29% and the BSE Small-Cap index lost 0.12%.

Sellers outpaced the buyers. On the BSE, 1147 shares rose and 1486 shares fell. A total of 181 shares were unchanged.

The Nifty has risen 6.35% in nine sessions. It has surged 1128.95 points, or 10.45% from its recent closing low of 10,805.55 on 24 September 2020.

COVID-19:

India reported 8,38,729 active cases of COVID-19 infection and 1,09,856 deaths while 62,27,295 patients have been discharged, according to the data from the Ministry of Health and Family Welfare, Government of India. Total COVID-19 confirmed cases worldwide stood at 37,745,942 with 1,079,963 deaths, according to data from Johns Hopkins University.

Economy:

India's industrial output contracted for the sixth straight month in August, due to lower output of manufacturing, mining and power generation sectors. Data released on Index of Industrial Production (IIP) by the Ministry of Statistics & Programme Implementation on Monday showed the index had contracted 8% in August compared with a fall 10.77% in July. The data further showed that, manufacturing sector production had registered a decline of 8.6%, while the output of mining and power segments fell 9.8% and 1.8%, respectively.

India's retail inflation jumped to its highest in eight months in September on the back of rising food prices. The Consumer Price Index-based inflation stood at 7.34% last month compared with 6.69% in August. Inflation in the food and beverages category stood at 9.73% in September against 8.29% in August, led by higher prices of vegetables, pulses, meat and fish.

Meanwhile, the GST Council on Monday failed to reach any consensus for the second time in a week over compensating states for shortfall in GST collections. The meeting, chaired by finance minister Nirmala Sitharaman, was a continuation of the 42nd GST Council meet held last week.

Addressing the media after the meeting, Nirmala Sitharaman said that the Centre cannot borrow and pay states for the shortfall, it is the States that need to borrow since it would lead to rise in bond yields, resulting in rise in borrowing costs for the government and the private sector.

Numbers to Watch:

The yield on 10-year benchmark federal paper rose to 5.904% as compared with 5.899% at close in the previous trading session.

In the foreign exchange market, the rupee edged lower against the dollar. The partially convertible rupee was hovering at 73.3550, compared with its close of 73.28 during the previous trading session.

In the commodities market, Brent crude for December 2020 settlement rose 72 cents at $42.44 a barrel. The contract fell $1.13, or 2.64% to settle at $41.72 a barrel in the previous trading session.

Foreign Markets:

The US Dow Jones index was down 99.5 points, indicating a negative opening in the US market today.

European indices declined while Asian stocks ended mixed on Tuesday. Hong Kong Exchanges and Clearing announced Tuesday that trading in the securities and derivatives markets, including after-hours futures trading, have been cancelled for the full day due to the typhoon.

Investors were awaiting earnings season to kick off in the US, while watching the latest China data and coronavirus developments.

China reported strong trade data in September as most business activity resumed in the world's second-largest economy, following the worst of the coronavirus pandemic.

For September, China's imports surged 13.2% in US dollar terms, according to official customs data on Tuesday. Exports rose 9.9% from a year ago. The country imported and exported a record amount of goods in yuan-denominated terms in September. In the third quarter, China's exports rose 10.2% from a year ago to 5 trillion yuan ($742.9 billion). Imports rose 4.3% to 3.88 trillion yuan during that time.

The US stock market finished higher for fourth straight session on Monday, as investors bought technology giants and shifted their focus to corporate earnings starting this week. The moves come against the backdrop of the looming U.S. presidential election and stalled talks for another round of coronavirus stimulus.

With less than three weeks to the presidential election, investors are now focusing on the outlook for the Democratic Party controlling both the White House and Congress.

Prospects for another fiscal stimulus package appeared to have simmed, as Democrats over the weekend rejected a $1.9 trillion proposal from Treasury Secretary Steven Mnuchin, representing the Trump administration's most generous aid proposal thus far.

Buzzing Indian Segment:

Cement stocks surged after a foreign brokerage reportedly indicated an improving demand outlook. According to reports, the brokerage said that the improving demand may pave the way for an increase in cement prices which had corrected between 2-5% in the second quarter.

UltraTech Cements (up 1.8%), Ambuja Cements (up 1.47%), Grasim Industries (up 0.85%), Birla Corporation (up 0.78%) and ACC (up 0.53%) advanced.

Cement stocks also rallied after finance minister Nirmala Sitharaman on Monday announced an additional budget of Rs 25,000 crore (in addition to Rs 4.13 lakh crore given in Budget 2020-21) to be provided for capital expenditure on roads, defence, water supply, urban development and domestically produced capital equipment.

Stocks in Spotlight:

Wipro fell 0.48% to Rs 375.75. The board of IT services company today approved a plan to buyback 23.75 crore shares at Rs 400 per equity share for an aggregate amount not exceeding Rs 9,500 crore. This represents 4.16% of total paid-up equity share capital of the company as on 30 September.

Meanwhile, Wipro's IT services segment revenue for the September quarter came in at $1,992.4 million, an increase of 3.7% QoQ. IT services operating margin for the quarter was at 19.2%, an expansion of 0.2% QoQ and 1.1% YoY.

Wipro expects revenue from its IT services business to be in the range of $2,022 million to $2,062 million for the December quarter, a sequential growth of 1.5% to 3.5%.

Rane Brake Lining spurted 12.91% after the company said its board will consider a share buyback on 15 October 2020.

Shalby gained 2.30% after the company's consolidated net profit rose 89.40% to Rs 24.47 crore on 8.04% decline in net sales to Rs 115.62 crore in Q2 September 2020 over Q2 September 2019.

Ramco Systems hit an upper circuit of 5% at Rs 515.20 after the company announced that it will implement its flagship aviation software Ramco Aviation M&E MRO Suite V5.8 for a leading helicopter OEM, to digitally transform its global MRO operations.

Bharti Airtel rose 0.02% to Rs 415.35 after the telecom major added 3.26 million subscribers in July with its market share improving to 27.96%.

SRF added 0.19% to Rs 4377. The specialty chemicals maker launched a qualified institutional placement (QIP) of shares on Monday (12 October 2020). The floor price has been set at Rs 4168.73 per equity share for the QIP, which is at a 4.58% discount to Monday's closing price of Rs 4368.85 per share.

In its draft placement document filed with the bourses, SRF said: "Our company proposes to utilize the net proceeds for funding suitable organic and inorganic growth opportunities, ongoing capital expenditure, other long term and short terms requirements, pre-payment and/or repayment of outstanding borrowings, general corporate purpose, or any other purposes, as may be permissible under applicable law and approved by our board or its duly constituted committee."

Cipla fell 3.25%. The drug major said that its step-down US-based subsidiary received complete response letter (CRL) from the US drug regulator for IV Trambol. The CRL stated that the application for IV tramadol cannot be approved in its present form. The drug, intended to treat patients in acute pain who require an opioid, is not safe for the intended patient population. The USFDA requires an adequate terminal sterilization validation prior to NDA approval, which is planned for later this quarter.

Alembic Pharmaceuticals gained 2.26% after its Associate Company Rhizen Pharmaceuticals SA (Rhizen) entered into an exclusive license agreement with Curon Biopharmaceutical for development and commercialization of Tenalisib, a Dual PI3K Delta and Gamma Inhibitor for Oncology in Greater China.

Under the terms of the agreement, Rhizen will receive an undisclosed upfront cash payment and is eligible to receive additional development and commercial milestone payments with an overall deal value of $149.5 million plus double-digit royalties on annual net sales of Tenalisib.

Lakshmi Vilas Bank declined 2.70%. The board of the private sector commercial bank will consider rights issue of equity shares on Thursday, 15 October 2020. The bank's board had earlier approved raising upto Rs 1000 crore by issuing equity shares through one or more permitted modes including further public offer, rights issue/qualified institutions placement to eligible investors.