Indian equity benchmarks ended over a percent lower on Friday, dragged by heavy selling pressure in Realty and Metal stocks on profit-taking and weak global market trends.  After making slightly positive start, key gauges traded on flat note as traders got anxious with an analysis of industrial output and merchandise exports by India Ratings and Research suggested that the Indian manufacturing sector, which received a fillip in FY22 due to export growth, is likely to be hit by a slump in foreign trade activity in FY23. Markets fell sharply in late morning session as an RBI article has warned that big bang privatisation of public sector banks can do more harm than good, and asked the government to take a nuanced approach on the issue. Sentiments remained down-beat in late afternoon deals, as Reserve Bank of India turned net seller of the US currency in June after it sold $3.719 billion on a net basis. In the reporting month, the central bank purchased $18.96 billion from the spot market and sold $22.679 billion. Some concerns also came with the finance ministry stating that exemptions specified in Free Trade Agreement (FTA) with regard to country of origin will prevail in case of conflict between revenue department and importer. Traders overlooked the PHD Chamber of Commerce and Industry's (PHDCCI) report stated that increasing domestic production in sectors such as chemicals, automotive components, drug formulations and consumer electronics will help in reducing imports worth about $35 billion from China in the coming times. Finally, the BSE Sensex fell 651.85 points or 1.08% to 59,646.15 and the CNX Nifty was down by 198.05 points or 1.10% to 17,758.45.

The US markets settled lower on Friday as traders looked to cash in on recent strength in the markets, which lifted the major averages well off their June lows to their best levels in almost four months. Traders may have been moving money out of stocks amid caution ahead of next week's economic symposium in Jackson Hole, Wyoming. Remarks by Federal Reserve officials at the annual symposium are likely to be in focus, as traders look for additional clues about the pace of future interest rate hikes. Recent comments from some Fed officials have indicated the central bank will continue to raise interest rates aggressively at its next meeting in September. St. Louis Fed president James Bullard said recently that he expects a third straight 75 basis point interest rate hike in September, while San Francisco Fed colleague Mary Daly said that raising rates by 50 or 75 basis points next month would be reasonable. Kansas City Fed president Esther George argued that the drop in inflation registered in July was not evidence the underlying problem was fixed. The sell-off on Wall Street may have been exaggerated by low volume as traders stuck to the sidelines ahead of the Jackson Hole symposium as well as next week's reports on durable goods orders, new home sales, and personal income and spending. The personal income and spending report due next Friday is likely to attract particular attention, as it includes a reading on inflation said to be preferred by the Fed.  

Recovering from early weakness, crude oil futures closed slightly higher on Friday after Richmond Federal Reserve President Thomas Barkin said that the central bank officials have a lot of time still before they need to decide how large an interest rate increase to approve at their policy meeting in September. Barkin added that the Fed is now balancing its rate hike path with uncertainty over any impact on the economy. A report from Baker Hughes said U.S. energy firms cut the number of oil and natural gas rigs for a third week in a row. The report said the oil and gas rig count in the U.S. fell by one to 762 this week. Oil rigs were unchanged at 601, while gas rigs fell one to 159. Benchmark crude oil futures for September delivery rose $0.27 or about 0.3 percent to settle at $90.77 a barrel on the New York Mercantile Exchange. Brent crude for October delivery added $0.13 or 0.1 percent to settle at $96.72 a barrel on London's Intercontinental Exchange. 

Indian Rupee ended weaker against dollar on Friday, on account of sustained dollar demand from importers and banks. Sentiments were fragile as an analysis of industrial output and merchandise exports by India Ratings and Research suggested that the Indian manufacturing sector, which received a fillip in FY22 due to export growth, is likely to be hit by a slump in foreign trade activity in FY23. Downfall in the Indian equity markets also impacted sentiments. On the global front, euro and sterling slipped to a one-month low versus the safe-haven U.S. dollar on Friday with investors worrying about further economic slowdown after Federal Reserve officials reiterated the need for higher rates. Finally, the rupee ended at 79.84 (Provisional), weaker by 20 paisa from its previous close of 79.64 on Thursday.

The FIIs as per Friday's data were net buyers in both equity and debt segment. In equity segment, the gross buying was of Rs 8278.02 crore against gross selling of Rs 4820.81 crore, while in the debt segment, the gross purchase was of Rs 508.32 crore against gross selling of Rs 419.35 crore. Besides, in the hybrid segment, the gross buying was of Rs 247.18 crore against gross selling of Rs 1201.04 crore.

The US markets ended lower on Friday with traders anxious about inflation and what the Federal Reserve will do to combat it. Asian markets are trading mostly in red on Monday amid concerns most major central banks are committed to raising interest rates no matter the risks to growth. Indian markets fell sharply on Friday amid uncertainty over how big will future U.S. rate hikes be. Today, markets are likely to make negative start amid weak global cues. There will be volatility in the entire week amid the impending F&O expiry. Traders will be concerned as the Reserve Bank of India (RBI) data showed that the country's foreign exchange reserves fell $2.238 billion to $570.74 billion in the week ended August 12. In the previous week ended August 5, the foreign exchange reserves declined $897 million to $572.978 billion. Some cautiousness will also come as retail inflation for farm and rural workers increased to 6.60 per cent and 6.82 per cent, respectively, in July mainly due to higher prices of certain food items. In June retail inflation for farm and rural workers stood at 6.43 per cent and 6.76 per cent respectively. Separately, the minutes of the MPC's recent policy meeting expressed concern that the impact of recent changes to GST rates and somewhat uneven distribution of the southwest monsoon rainfall could be a source of upward pressure on prices. Also, the area under paddy in the week ended August 18 was almost 8.25 per cent less than in the equivalent period last year. However, some respite may come later in the day as the finance ministry's monthly economic review said India is better placed on the growth-inflation-external balance triangle for 2022-23 than it was two months ago, on the back of government policy response and the Reserve Bank's monetary policy actions. Some support may also came as after turning net buyers last month, foreign investors have shown tremendous enthusiasm for Indian equities and have infused close to Rs 44,500 crore in August so far amid softening of inflation in US and falling dollar index. There will be some buzz in jewelry industry stocks as the government data showed that India's gold imports rose 6.4 per cent to $12.9 billion during April-July this fiscal due to healthy demand. There will be some reaction in real estate industry stocks with a private report that India's residential market is expected to sustain demand momentum despite rise in mortgage and property rates as sales this year across the top 7 cities are likely to breach pre-pandemic level of 2.62 lakh units.

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

Nifty Top volumes

• Coal India has reported its production of 224 million ton till August 11, 2022, achieving a strong growth of 24% - the like of which was never witnessed before. 
• SBI has sold NPA account of KSK Mahanadi Power Company to Aditya Birla ARC for Rs 1,622 crore, accepting a haircut of almost 58 per cent against the total outstanding. 
• GAIL (India) has received approval to raise upto the limit of sum equivalent to Rs 25,000 crore in one or more tranches from time to time by way of various modes.
• CCI has approved amalgamation of Creixent Special Steels and JSW Ispat Special Products with and into JSW Steel under Section 31(1) of the Competition Act, 2002.