Indian equity benchmarks managed to close marginally higher in the highly volatile session on Monday as investors preferred to remain on back foot ahead of the Retail inflation data later in the day. The markets made a gap-down opening and stayed in the negative terrain in the first half as data showed that growth in the index of industrial production (IIP) cooled to a three-month low of 3.7 per cent in June from 5.2 per cent in May, on the back of a high base effect and slowdown in manufacturing output. Some concern also came as the National Institute of Public Finance and Policy (NIPFP) in a mid-year macroeconomic review said that India's economic growth is expected to slow down to 6 per cent in this financial year (FY24) from 7.2 per cent in FY23 due to headwinds in the global economy. Also, latest data by the Reserve Bank of India showed India's foreign exchange reserve declined by $2.4 billion to $601 billion in the week ended July 4. However, key gauges cut their losses in the second half and closed with minor gains as data showed that net direct tax collections swelled 17.33 per cent to Rs 5.84 lakh crore so far this fiscal, reaching 32 per cent of the full-year budget estimates (BE). The Income Tax department said the collections from direct taxes, which include personal income tax and corporate tax, up to August 10, 2023, continue to register steady growth. Traders paid no heed towards data indicating that India's inflation based on wholesale price index (WPI) deflated for the fourth straight month in July at (-) 1.36% as against (-) 4.12% recorded in June, 2023, due to fall in the prices of Minerals, Mineral oils, and Electricity. Finally, the BSE Sensex rose 79.27 points or 0.12% to 65,401.92 and the CNX Nifty was up by 6.25 points or 0.03% to 19,434.55.

The US markets ended lower on Tuesday on rising worries about the health of China's economy, and concerns about U.S. interest rate after data showed a bigger than expected increase in retail sales in the month of July rendered the mood bearish. Further, higher bond yields, and a warning from Fitch that it may have to downgrade credit ratings of several banks, including JP Morgan, hurt as well. Major banks JP Morgan, American Express, Wells Fargo, Citigroup and Goldman Sachs, all ended weak, losing between 1.7 to 2.8 percent. Chevron, Caterpillar, Intel, 3M and Walt Disney lost 2 to 2.8 percent. Boeing, Travelers Companies, Walgreens Boots Alliance, Visa, Cisco Systems and Nike ended lower by 1 to 1.7 percent. Apple, Meta Platforms and Alphabet also ended notably lower. Amgen climbed nearly 2 percent. On the economic data front, data from the Labor Department showed export prices in the U.S. surged 0.7 percent month-over-month in July after a downwardly revised 0.7 percent fall in June. On a yearly basis, export prices dropped 7.9 percent, following an 11.9 percent decline in June. Import prices rose 0.4 percent in July, following a downwardly revised 0.1 percent drop in June. Year-on-year, import prices were down 4.4 percent compared to 6.1 percent plunge in June.

Crude oil futures ended deeply in red on Tuesday on rising concerns about the outlook for energy demand following another batch of weak economic data from China. China's industrial output and retail sales slowed last month, and fixed-asset investment growth also lost more momentum, suggesting that more support is needed to revitalize flagging economic growth. China's industrial production and retail sales grew less than expected in July. Industrial production registered an annual growth of 3.7 percent in July, the National Bureau of Statistics reported. Street had forecast output to grow 4.4 percent, the same rate as seen in June. Meanwhile, the Chinese central bank unexpectedly cut two key interest rates to shore up the struggling economy. Benchmark crude oil futures for September delivery fell $1.52 or about 1.8 percent to settle at $80.99 a barrel on the New York Mercantile Exchange. Brent crude for October delivery dropped $1.32 or1.5 percent to settle at $84.49 a barrel on London's Intercontinental Exchange.

The Indian rupee ended weaker against the US dollar on Monday amid foreign fund outflows. Traders were worried after India reported a widened trade deficit for the month of July. The merchandise trade deficit of the country widened from $20.13 billion in June 2023 to $20.67 billion in the month of July. The merchandise trade deficit stood at $25.43 billion for the month of June 2022. Traders took a note of report that India's inflation based on wholesale price index (WPI) deflated for the fourth straight month in July at (-) 1.36% due to fall in the prices of Minerals, Mineral oils, and Electricity. On the global front, the pound ticked a fraction higher against the dollar on Monday as traders stayed focused on key data due this week for hints on the Bank of England's future interest rate hike trajectory. Finally, the rupee ended at 83.08 (Provisional), weaker by 26 paise from its previous close of 82.82 on Friday.

The FIIs as per Monday's data were net sellers in equity segment, while they were net buyers in debt segment. In equity segment, the gross buying was of Rs 9665.47 crore against gross selling of Rs 12200.08 crore, while in the debt segment, the gross purchase was of Rs 1588.48 crore with gross sales of Rs 326.59 crore. Besides, in the hybrid segment, the gross buying was of Rs 18.32 crore against gross selling of Rs 6.69 crore.

The US markets ended lower on Tuesday after a stronger-than-expected report on U.S. retail sales data. Asian markets are trading in red on Wednesday as renewed concerns about U.S. interest rates slugged Wall Street, while investors still smarted from dismal Chinese economic data and the absence of meaningful stimulus. Indian markets staged a smart recovery in the second half of the session and ended flat with positive bias on Monday after wholesale price inflation remained in the negative territory for the fourth month in a row in July. Today, markets are likely to get negative start after a day's holiday amid weak cues from the overseas counterpart. Higher-than-expected India's Consumer Price Index (CPI) inflation print as well as trade deficit figures to keep markets under pressure. Retail inflation spiked to a 15-month high of 7.44 per cent in July much higher than 4.87 per cent in June as tomatoes, vegetables and other food items turned costlier, overshooting Reserve Bank's comfort level for the first time in the current fiscal. Also, traders will be concerned as the value of goods exported from India fell to a nine-month low at $32.25 billion in July, witnessing a 15.9 per cent contraction as external demand continued to remain sluggish due to factors including a slowdown and high inflation in developed economies. India's trade deficit, which shows the difference between imports and exports, rose to $20.67 billion in July as compared to $20.13 billion in June. However, some support may come as a report by SBI Research showed that the per capita income of Indians as gleaned from income-tax filing is expected to increase from Rs 2 lakh in FY23 to Rs 14.9 lakh in FY47, coinciding with 100 years of the country's Independence. There will be some buzz in cotton industry stocks as the Cotton Association of India (CAI) maintained the cotton crop production forecast for the 2022-23 season at 311.18 lakh bales. In the last cotton season, the total cotton production was at 307.05 lakh bales. Oil & gas industry stocks will be in focus as the government hiked special additional excise duty on crude petroleum to Rs 7,100 per tonne with effect from August 15. There will be some reaction in diamond industry stocks with report that the Indian diamond industry is set to focus on domestic markets and emerging markets in ASEAN countries in an attempt to neutralise the impact of reduced demand from the US and the European Union (EU). Aviation industry stocks will be in limelight as DGCA data showed that India's domestic air passenger traffic volume surged 25 per cent year-on-year to 1.21 crore passengers in July.

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

Nifty Top volumes

• Larsen & Toubro's construction arm -- L&T construction has secured orders for its Buildings & Factories Business in India and Bangladesh.
• Bajaj Finserv's wholly owned subsidiary -- Bajaj Finserv Asset Management has launched the Bajaj Finserv Flexi Cap Fund, an equity scheme with innovative investment strategy.
• UltraTech Cement is targeting a production capacity of 200 million tonnes per annum as it looks to become one of the largest cement companies in the world.
• ONGC's overseas arm -- ONGC Videsh has sought another three-year extension to explore for oil and gas in a Vietnamese block in the contested waters of the South China Sea.