Indian shares are set for a muted open on Tuesday, on weak economic data from China amid a rapid spread of Covid-19 cases, raising fears that the world's second largest economy could be tipped into a growth slowdown.

India's NSE stock futures listed on the Singapore Exchange were down 0.24 per cent at 18,180, as of 8:10 am IST on Tuesday.

China's factory activity contracted at a sharper pace in December as Covid-19 infections slammed production lines after Beijing eased stringent curbs, a private sector survey showed on Tuesday.

The country's Purchasing Managers Index for December had slid to a three-year low, according to official data released over the weekend. Asian markets declined, with the MSCI Asia ex-Japan index falling 0.25 per cent. US markets remained closed on Monday due to New Year holiday.

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Capping the losses in domestic equities could be oil prices, which fell on global growth concerns after International Monetary Fund's Managing Director Kristalina Georgieva predicted a tougher 2023 than 2022 for the global economy.

Lower oil prices aid oil-importing countries like India, where crude constitutes the bulk of the country's import bill. Foreign institutional investors sold $25.74 million worth of equities on a net basis on Monday, while domestic investors bought about ₹7.43 billion worth of shares, as per provisional NSE data.

Stocks to watch
  • Zomato: Co's co-founder and chief technical officer Gunjan Patidar tendered his resignation.
  • HFCL: Co got orders worth ₹953.8 million from Reliance Projects & Property Management Services for supply of optical fibre cables.
  • Mahindra & Mahindra Financial Services: Co saw disbursement in December rise 67 per cent y-o-y to ₹46.50 billion.
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