After two days of pause, Indian equity benchmarks resumed their uptrend and gained over half a percent on Monday, following the global market trend, as cooling inflation across the globe gave hopes of an end to the policy tightening era. Domestic equities started the week on a tepid note amid foreign fund outflows. Provisional data from the National Stock Exchange (NSE) showed that foreign institutional investors (FII) sold shares worth Rs 1,023.91 crore on July 28. Some concern also came as Reserve Bank of India's data showed India's foreign exchange reserves saw a dip of $1.9 billion, dragging the reserves to $607.03 billion for the week ending on July 21. However, key gauges soon turned positive as traders took encouragement with Finance minister Nirmala Sitharaman's statement that the government is focusing on four I's - infrastructure, investment, innovation and inclusivity to put in place an enabling ecosystem that will catapult India into the league of developed nations by 2047. Markets extended gains in second half of trading session, taking support from Commerce and Industry Minister Piyush Goyal's statement that he is hopeful of India finalising certain free trade agreements (FTAs) in the next few months, which would help promote exports. India is in the final stages of concluding FTA negotiations with the UK. The country is also negotiating similar pacts with Canada and European Union (EU). Some optimism also came with a private report that the country's per capita income is likely to grow by close to 70 per cent to $4,000 by fiscal 2030 from $2,450 in fiscal 2023, helping it become a middle-income economy with $6-trillion GDP, more than half of which will be coming in from household consumption. Traders took a note of the income tax department's statement that over 5 crore income tax returns (ITRs) have been filed for the 2022-23 fiscal, which ended March 31. Out of the 5.03 crore ITRs filed till July 27, 2023, about 4.46 crore ITRs have been e-verified i.e. more than 88 per cent ITRs filed have been e-verified. Finally, the BSE Sensex rose 367.47 points or 0.56% to 66,527.67 and the CNX Nifty was up by 107.75 points or 0.55% to 19,753.80.

The US markets eked out small gains as July came to a close on Monday, booking a fifth consecutive monthly gain for the S&P 500 and Nasdaq Composite amid optimism over corporate earnings and a resilient economy. However, traders seemed reluctant to make significant moves as they await the release of key economic data in the coming days, including the closely watched monthly jobs report on Friday. Reports on initial jobless claims, factory orders and manufacturing and service sector activity could also impact trading. With the Federal Reserve indicating future interest rate decisions, upcoming economic data may attract more attention than usual. On the sectoral front, energy stocks saw considerable strength, however, with a sharp increase by the price of crude oil contributing to the strength in the sector. On the economic data front, Chicago-area business activity contracted at a slightly slower rate in the month of July, according to a report released by MNI Indicators on Monday. MNI Indicators said its Chicago business barometer inched up to 42.8 in July from 41.5 in June, although a reading below 50 still indicates a contraction. Street had expected the index to rise to 43.0. The uptick by the Chicago business barometer partly reflected increases by the new orders and production indices. While the new orders index climbed by 3.4 points, MNI Indicators said the increase masked the fact that the proportion of respondents reporting an increase in new orders in June was actually the lowest of the year. The production index also rose by 2.5 points or 45.1. The proportion of respondents citing higher production was the same level as in June but fewer noted reduced production.

Crude oil futures ended higher on Monday amid signs of tight supply and optimism over increased demand in the U.S. and China. Further, rising expectations about an end to U.S. rate hikes, and hopes that Saudi Arabia will continue with its output reduction plan right through the month of September contributed as well to the uptick in oil prices. Benchmark crude oil futures for September delivery rose $1.22 or about 1.5 percent to settle at $81.80 a barrel on the New York Mercantile Exchange. Brent crude for September delivery surged $0.57 or about 0.7 percent to settle at $85.56 a barrel on London's Intercontinental Exchange.

The Indian rupee ended weaker against the US dollar on Monday tracking surging crude oil prices. Besides, month-end dollar demand from importers and foreign capital outflows weighed on the local currency. Traders were cautious as Reserve Bank of India's data showed India's foreign exchange reserves saw a dip of $1.9 billion, dragging the reserves to $607.03 billion for the week ending on July 21. Traders overlooked private report stating that the country's per capita income is likely to grow by close to 70 per cent to $4,000 by fiscal 2030 from $2,450 in fiscal 2023, helping it become a middle-income economy with $6-trillion GDP, more than half of which will be coming in from household consumption. On the global front, the yen softened on Monday, extending losses from a volatile session at the end of last week after the Bank of Japan (BOJ) loosened its grip on interest rates, but it remained on track for its first monthly gain against the dollar since March. Finally, the rupee ended at 82.24 (Provisional), weaker by 6 paise from its previous close of 82.18 on Friday.

The FIIs as per Monday's data were net buyers in equity and debt segments both. In equity segment, the gross buying was of Rs 11934.14 crore against gross selling of Rs 10681.79 crore, while in the debt segment, the gross purchase was of Rs 552.50 crore with gross sales of Rs 166.85 crore. Besides, in the hybrid segment, the gross buying was of Rs 4.86 crore against gross selling of Rs 5.15 crore.

The US markets ended higher on Monday despite data showed Chicago-area business activity contracted at a slightly slower rate in July. Asian markets are trading mostly in green on Tuesday after China's top economic planning agency outlined details to stimulate consumer spending and reports suggested that Beijing and Shenzhen may ease curbs on the property sector. Indian markets recovered from an early slide and ended higher on Monday, with IT and metal stocks leading the surge. Today, markets are likely to get optimistic start tracking firm global cues. Market participants will be eyeing Manufacturing PMI data to be out later in the day for more cues. Sentiments will get a boost as core sector output growth hitting a five-month high in June due to a high base effect and positive growth in seven of the eight sectors. Some support will come with a private report that the pace of credit offtake continued to be robust in June 2023, with sectors clocking year-on year (YoY) growth of between 8.1 per cent and 26.7 per cent. Traders may take note of report that India is expected to receive normal rainfall in the August-September period after excess precipitation in July. However, traders may be concerned amid foreign fund outflows. According to the provisional data available on the NSE, foreign institutional investors (FII) sold shares worth net Rs 701.17 crore on July 31. Meanwhile, the government data showed that the Centre's fiscal deficit at the end of the first quarter touched 25.3 per cent of the full-year target. According to the data releaased by the Controller General of Accounts (CGA), in absolute terms, the fiscal deficit - the gap between expenditure and revenue - was Rs 4,51,370 crore as of end-June. Oil & gas sector stocks will be in focus as the Indian government hiked windfall tax on petroleum crude to Rs 4,250 ($51.68) per tonne from Rs 1,600 with effect from August 1. A windfall tax on diesel has been increased to Rs 1 per litre from nil earlier. There will be some reaction in IT stocks as the government extended the deadline to apply for benefits under the production-linked incentive scheme for IT hardware products such as laptops, tablets, all-in-one PCs, servers, and edge computing devices till August 30. Auto stocks will be in focus reacting to their monthly sales numbers. Meanwhile, the April-June quarter (Q1FY24) will continued to be tracked by investors. Companies like Inox-PVR, KPR Mills, Adani Total Gas, and Escorts Kubota are some of the prominent names to report Q1 scorecard on August 1.

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

Nifty Top volumes

• Nestle India is focusing on 12-13 states to grow its distribution footprint in semi-urban and rural markets and offering relevant packs. 
• Tata Motors has delivered a prototype of its indigenously-developed electric bus to the Bengaluru Metropolitan Transport Corporation. 
• Sun Pharmaceutical Industries is looking at high single-digit growth in its consolidated topline in FY24 on the back of robust performance from all its business verticals.
• Bharti Airtel has prepaid Rs 8,024 crore to the DoT (Government of India) towards part prepayment of deferred liabilities pertaining to spectrum acquired in auction of year 2015.