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.

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.