Extending gains to a second straight session, Indian equity benchmarks closed at a near two-month high on Monday, amid across-the-board buying, with Capital Goods and Realty stocks in high demand. The markets started off the week on a strong note, as traders took encouragement with the National Statistical Office (NSO) in its first advance estimate indicated that the Indian economy remains on track to regain its position as the world's fastest-growing major economy and put the GDP expansion at a tempered 9.2 per cent this fiscal. Traders also remain energized with SBI Ecowrap report stating that India's real GDP is expected to grow at around 9.5 per cent in 2021-22 on a year-on-year (YoY). As per the report, going forward, even if the rising Covid infections could impact mobility, yet economic activity is not expected to get affected much. Adding more optimism, foreign investors have turned net buyers in the first week of January by infusing Rs 3,202 crore in Indian equities, as correction in markets provided them good buying opportunity. Benchmarks extended gains and were trading near the day's high in late afternoon deals, as sentiments' were upbeat after a quarterly employment survey by the labour ministry released that total employment generated by nine select sectors stood at 3.10 crore in the July-September 2021 quarter, which is 2 lakh more than that of the April-June period. Traders also took solace with private report stated that the month of December 2021 witnessed signs of revival in hiring activity in multiple sectors beyond IT, such as retail, hospitality and education. Additional support came as the country began administering the precautionary dose or the booster shot of coronavirus vaccine to health and frontline workers and immuno-compromised senior citizens. Finally, the BSE Sensex rose 650.98 points or 1.09% to 60,395.63 and the CNX Nifty was up by 190.60 points or 1.07% to 18,003.30.

The US markets settled mostly lower on Monday on lingering concerns about the economic impact of the Omicron variant of the coronavirus and the likelihood the Federal Reserve will raise interest rates in the near future. Meanwhile, Treasury yields have moved sharply higher in recent sessions, with the yield on the benchmark ten-year note reaching its highest levels since January of 2020. The jump in yields comes amid a more hawkish tone from the Fed, as the minutes of the central bank's latest meeting indicated it plans to accelerate monetary policy normalization. Further, traders also looked ahead to key inflation data as well as a Senate hearing on Fed Chair Jerome Powell's renomination. On the sectorl front, airline stocks continued to see significant weakness on the day, resulting in a 1.7 percent drop by the NYSE Arca Airline Index. Considerable weakness also remained visible among steel stocks, as reflected by the 1.2 percent decline by the NYSE Arca Steel Index. Retail and telecom stocks also ended the day notably lower, while gold stocks showed a strong move to the upside amid a modest increase by the price of the precious metal.

Crude oil futures ended lower on Monday, extending their previous session's losses, on concerns about the outlook for energy demand due to the rapid surge in the Omicron variant of the coronavirus across the globe. Further, a firm dollar amid rising prospects for a series of interest rate hikes weighed as well on crude oil prices. However, downside remained capped as supply disruptions in Kazakhstan and Libya offset worries about rising coronavirus cases. Benchmark crude oil futures for February delivery fell $0.67 or 0.9 percent to settle at $78.23 a barrel on the New York Mercantile Exchange. Brent crude for March delivery dropped $0.88 or 1.1 percent to settle at $80.87 a barrel on London's Intercontinental Exchange.       

Indian rupee ended higher against dollar on Monday, owing to dollar sale by exporters and banks. This is the second consecutive session when the rupee traded higher against dollar. Also, strong gains in domestic equity markets supported rupee. Sentiments were upbeat after three months of selling spree, foreign investors have turned net buyers in the first week of January by infusing Rs 3,202 crore in Indian equities, as correction in markets provided them good buying opportunity. Traders took encouragement with NSO in its first advance estimate indicated that the Indian economy remains on track to regain its position as the world's fastest-growing major economy and put the GDP expansion at a tempered 9.2 per cent this fiscal. On the global front, sterling on Monday hit its highest level against the euro since February 2020 amid rate rise expectations and easing fears about the adverse impact of the Omicron variant on the economy. Finally, the rupee ended 74.05, stronger by 29 paise from its previous close of 74.34 on Friday.

The FIIs as per Monday's data were net buyers in both equity and debt segment. In equity segment, the gross buying was of Rs 8170.46 crore against gross selling of Rs 7677.52 crore, while in the debt segment, the gross purchase was of Rs 242.87 crore with gross sales of Rs 234.15 crore. Besides, in the hybrid segment, the gross buying was of Rs 12.21 crore against gross selling of Rs 2.92 crore.  

The US markets ended mostly lower on Monday as traders are awaiting the testimony of Jerome Powell for tapering cues to curb inflation. Asian markets are trading mixed on Tuesday amid concerns about a tightening US monetary policy to address accelerating inflation. Indian markets extended gains to a second straight day on Monday to close at their strongest levels recorded since November 15 amid broad-based gains. Today, the markets are likely to start session in negative note amid weak global cues. Traders will be concerned with a private report stating that sluggish growth momentum in the December quarter and emerging risk from the third Covid-19 wave may shave 80 basis points (bps) off India's real gross domestic product (GDP) growth to 9 per cent for FY22. Also, the Indian Banks' Association (IBA) said the resurgence in the Covid cases caused by the Omicron variant may create some disruptions to the growth momentum. There will be some cautiousness as data from the Reserve Bank of India (RBI) showed outward foreign direct investment by Indian companies fell by over 8 per cent to $2.05 billion in December 2021 in the current fiscal. Rising coronavirus cases may impact the markets. the Union Health Ministry data showed that India saw a single-day rise of 1,79,723 coronavirus infections taking the total tally to 3,57,07,727, including 4,033 cases of the Omicron variant reported across 27 states and union territories so far. However, some support may come later in the day as a quarterly employment survey released by the Union labour ministry showed that total employment in nine sectors rose to 3.10 crore during the July-September period of 2021, an increase of 2 lakh compared to June quarter last year. Meanwhile, the Centre has procured 532.86 lakh tonnes of paddy so far in the ongoing 2021-22 marketing year season, with maximum quantities being purchased from Punjab. There will be some buzz in the energy stocks with ICRA's report that the country's renewable energy capacity addition is estimated to touch 16 GW in the next financial year in view of the strong pipeline of 55 GW clean energy projects. Telecom stocks will be in focus as a Trai report released showed that telecom service providers' gross revenue declined by 1.36 per cent on a year-on-year basis to Rs 67,300 crore in the July-September 2021 quarter. There will be some reaction in insurance industry stocks as data from Irdai showed the gross direct premium underwritten by non-life insurance companies grew by 7.3 per cent to Rs 18,953.09 crore in December 2021. The non-life insurance companies had underwritten gross premium valuing at Rs 17,662.32 crore in December 2020.

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

Nifty Top volumes

• Tata Steel has increased stake in Medica TS Hospital (MTSHPL) (a joint venture company) from 26% to 51% on January 7, 2022. 
• L&T's construction arm -- L&T construction has secured an order from the esteemed NHSRCL, to design and construct the Mumbai Ahmedabad High Speed Rail Project.   
• Reliance Industries' wholly owned subsidiary -- RIIHL has entered into an agreement to acquire the entire issued share capital of Columbus Centre Corporation. 
• Tech Mahindra has partnered with Pyze, a leader in Low-Code Process and Business Value analytics, to provide cutting-edge enterprise modernization solutions.