Indian equity benchmarks continued to rise for a fourth straight session on Monday, led by strength in power, utilities, auto and telecom stocks. Domestic indices made positive start and stayed in green for whole day, amid strong inflows from foreign investors. After nine consecutive months of relentless selling, foreign investors have turned net buyers and invested nearly Rs 5,000 crore in Indian equities in July on softening dollar index and good corporate earnings. Traders also found some encouragement as retail inflation for industrial workers eased to 6.16 per cent in June from 6.97 per cent in May this year due to lower prices of certain food items and petrol. Some optimism also came with the government data showed that the output of eight core infrastructure sectors expanded by 12.7 per cent in June against 9.4 per cent in the year-ago period. Key gauges added gains to trade at day's high points in late afternoon session, as India's manufacturing sector activity gained momentum in July, hitting an eight-month high driven by a significant uptick in business orders. The seasonally adjusted S&P Global India Manufacturing Purchasing Managers Index rose from 53.9 in June, to 56.4 in July, highlighting the strongest improvement in the health of the sector in eight months. Sentiments remained upbeat after finance ministry said that India collected Rs 1.49 lakh crore as Goods and Services Tax (GST) in July, posting an increase of 28 percent from the same month last year. Compared to the money collected in June, the July GST mop-up was 3 percent higher. Meanwhile, the Controller General of Accounts (CGA) in its latest data has showed that the central government's fiscal deficit touched 21.2 per cent of the annual target in the June quarter as against 18.2 per cent in the year-ago period. Finally, the BSE Sensex rose 545.25 points or 0.95% to 58,115.50 and the CNX Nifty was up by 181.80 points or 1.06% to 17,340.05.

The US markets settled lower after a choppy session on Monday. The mood in the market was quite cautious due to worries about a possible recession after data showed weakening factory activity in Asia and Europe. Data showing manufacturing activity in the US rose at the weakest rate in nearly two years hurt as well. The S&P Global US Manufacturing PMI was revised slightly lower to 52.2 in July of 2022 from a preliminary of 52.3, pointing to the lowest factory growth since July of 2020. The Institute for Supply Management said the ISM Manufacturing PMI edged lower to 52.8 in July of 2022 from 53 in June, beating market forecasts for a reading of 52. The reading pointed to a 26th straight month of rising factory activity but the weakest rate since June of 2020. Data from the Commerce Department showed construction spending in the US fell by 1.1 percent from the previous month to a seasonally adjusted annual rate of $1.76 trillion in June, compared to the revised 0.1 percent increase in May and market expectations of a 0.1 percent rise. On the sectoral front, shares of energy firms drifted down after oil prices tumbled amid concerns about outlook for energy demand due to global economic slowdown. Bank stocks were weak as well. However, fairly encouraging corporate earnings updates helped limit market's downside. Stock specific development, Boeing shares climbed more than 6 percent on reports that the Federal Aviation Administration had approved the jet maker to restart deliveries of its 787 Dreamliner.  

Crude oil futures ended deeply in red on Monday on concerns about outlook for energy demand after weak manufacturing data from China and Europe. China's National Bureau of Statistics said that the nation's factory activity contracted in July. The data said the country's manufacturing PMI fell to 49 in the month from 50.2 a month earlier, due to fresh Covid-19 outbreaks. Also, traders appeared reluctant to create fresh long positions in the commodity ahead of this week's OPEC+ meeting, in which the group is set to consider keeping output unchanged for September. Benchmark crude oil futures for September delivery fell $4.73 or 4.8 percent to settle at $93.89 a barrel on the New York Mercantile Exchange. Brent crude for October delivery dropped $3.94 or 3.8 percent to settle at $100.03 a barrel on London's Intercontinental Exchange.

Rising for third straight session, Indian rupee strengthened substantially against dollar on Monday, owing to dollar sale by exporters and banks. Sentiments were upbeat as Indian manufacturing activity surged to eight-month high in the month of July, with marked gains in growth of new business and output. According to the report, the seasonally adjusted S&P Global India Manufacturing Purchasing Managers Index (PMI) rose to 56.4 in July from 53.9 in June. The upturn was broad-based by sub-sector, and led by investment goods. Traders also remain energized as output of eight core infrastructure sectors expanded by 12.7 per cent in June 2022 as against 9.4 per cent in the year-ago period, with all sectors except crude oil registering an uptick in production. On the global front, dollar declined to its lowest level in more than six weeks against the Japanese yen on Monday as investors ramped up bets that aggressive Federal Reserve monetary policy would tip the economy into a recession. Finally, the rupee ended at 79.08 (provisional), stronger by 16 paisa from its previous close of 79.24 on Friday.

The FIIs as per Monday's data were net buyers in equity, while net sellers in debt segment. In equity segment, the gross buying was of Rs 8787.99 crore against gross selling of Rs 7317.82 crore, while in the debt segment, the gross purchase was of Rs 446.62 crore against gross selling of Rs 894.11 crore. Besides, in the hybrid segment, the gross buying was of Rs 4.86 crore against gross selling of Rs 12.84 crore.

The US markets ended lower on Monday in a choppy first session of August trading as Wall Street struggled to sustain July's momentum. Asian markets are mostly trading in red in early deals on Tuesday following the negative cues from global markets overnight, with weakness in technology, financial and energy-linked shares. Indian equity markets ended higher on Monday, mirroring positive global cues. Today, markets are likely to make negative start amid weak cues from global markets after weak manufacturing data from China and Europe.  There may be cautiousness in the markets as private report stated that the Reserve Bank of India will deliver two more rate increases with the first of 25-30 bps later this week, and then pause for data-prints on domestic inflation and the US economy. The US economy is widely feared to be headed towards a recession this year having already contracted by 0.9 per cent in the June quarter and 1.6 per cent in the previous. If an economy contracts for three consecutive quarters, then it is considered that economy is in recession. However, some respite may come later in the day as finance minister Nirmala Sitharaman said India's macroeconomic fundamentals are intact and there is no risk of the economy entering into recession or stagflation. She said the government is trying to keep inflation below 7%. There may be some action in cement industry stocks as rating agency Icra said that cement companies are expected to register a 7-8 per cent rise in their volumes in FY23 on strong demand, but operating profit margin may decline due to elevated input costs. It said the operating margins will be the lowest in the last seven years for the cement industry. In FY23, the volume for the cement industry is expected to grow by 7-8 per cent to around 388 million metric tonne. There will be some buzz in telecom industry stocks as Communications Minister Ashwini Vaishnaw said India's telecom industry is likely to see an investment of Rs 2-3 trillion in the next two years as reforms by the government have removed uncertainty and risks, and provided a stable investment regime.  Buoyed by record bids in the auction of 5G spectrum, Vaishnaw said he expects investments to be infused into both fourth and fifth generation technologies, for providing better voice quality and high-speed data.

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

Nifty Top volumes

• UPL has reported 34.18% rise in its consolidated net profit at Rs 1,005 crore for Q1FY23 as compared to Rs 749 crore for the same quarter in the previous year.
• Coal India's coal production has increased by 11.1% to 47.3 million tonnes (MT) in July 2022 as against 42.6 MT in July 2021.
• Infosys has opened its Sydney Living Lab, a high-tech co-creation space for digital innovation, part of a network of over 20 established globally, including Melbourne.
• Dr. Reddy's Laboratories has received approval for proposal of sale of its investment in the Wholly-owned Subsidiary -- Imperial Credit, subject to applicable regulatory approvals.