Tracking volatility in the global markets ahead of the US Federal Reserve meeting, the Indian market declined nearly one per cent on closing basis on Tuesday.

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Concerns over the global economic slowdown accelerated further as global corporate majors continued their trend of downgrading future estimates, said  Vinod Nair, Head of Research at Geojit Financial Services, over weakness in the market. "The Fed’s meeting commencing today, which is expected to maintain its aggressive rate hike of 75 bps, weighed on recession fears, especially in western markets. Even though the domestic market is showcasing strength, the spillover effect from the western market is inevitable," Nair added.

Meanwhile, benchmarks Nifty50 and Sensex corrected around 0.90% each as the indices extended weakness to the second consecutive day. The broader Nifty50 slipped below 16,500, while the Sensex took a hit around 500 points to settle near 55,250.  

Reacting to the near 500 points fall in the 30-share index, Rahul Shah, Co-Head of Research, Equitymaster, said the Sensex is trading close to its long-term average PE multiple of 20x-21x. Therefore, the onus of taking the markets higher is predominantly on earnings growth, he said.  

"While it was expected that earnings would put up a good show in FY23, doubts have started to creep in on this front. Macro headwinds like fast depreciating rupee, high inflation and hawkish central banks, have led to a few experts already initiating earnings downgrades. And more could follow suit. Thus, unless there is some good news on this front, markets are likely to remain sluggish over the near term," said Shah.  

Furthermore, underperforming the benchmarks, the Nifty Midcap dropped 1.2% and Smallcap declined by 1.5%.  

On the sectoral front, except for Nifty Media, all other Nifty sectoral indices slipped in the red. Nifty IT and FMCG were among the top losers.  

On Nifty Bank outlook, Kunal Shah, Senior Technical Analyst at LKP Securities, said the banking index on the daily chart has formed an evening star pattern on the daily chart, which indicates a pause in the current uptrend. "The follow-up action after a bearish pattern formation is necessary and if happens will lead to a further fall on the downside towards 36000-35700 levels. The immediate upside resistance stands at 36,600 and if breached will lead to fresh short covering towards 37,000 levels," he said.

Among stocks, Bajaj Finserv, JSW Steel, Grasim, BHarti Airtel, Coal India, Bajaj Finance, Powergrid and ITC were among top gainers.  

Infosys, Hindustan Unilever, Axis Bank, Dr Reddy's, Kotak Bank, HCL Tech, Tech Mahindra and Wipro were top laggards on Tuesday.