Monday turned out to be a volatile session for Indian equity markets, with both Sensex and Nifty closing near their intraday low points, ahead of the US Fed's interest rate decision this week. Indices made a cautious start of the trading day, but managed to trade above neutral lines in morning deals, as the Reserve Bank of India said India's forex reserves have swelled by $12.743 billion to $609.022 billion in the week ended July 14, making it one of the strongest weekly surges in the kitty in recent times. However, volatility witnessed over the street in afternoon deals as key indices swung between green and red, as foreign fund outflows also dented sentiments in the markets. Provisional data from the NSE showed that foreign institutional investors (FII) sold shares worth Rs 1,998.77 crore on July 21. Traders were concerned as retail inflation for farm workers and rural labourers inched up marginally to 6.31 per cent and 6.16 per cent, respectively in June as compared to 5.99 per cent and 5.84 per cent in May this year. In the last hour of the trade, losses got intensified in markets, following weak cues from European markets. Some pessimism came as a private report that consumer price inflation is expected to overshoot the Reserve Bank's tolerance mark of 6 per cent again in July and August due to the sky high vegetable prices. Traders remained cautious, amid a private report stating that India's economy will grow at a solid pace for the rest of this fiscal year and next but well below its potential rate, and the employment situation will improve only slightly. Finally, the BSE Sensex fell 299.48 points or 0.45% to 66,384.78 and the CNX Nifty was down by 72.65 points or 0.37% to 19,672.35.

The US markets ended higher on Monday. The Dow Jones Industrial Average extended its latest rally to an 11th straight day on Monday, only the sixth time since 1945 that the benchmark has advanced for 11 or more consecutive days. The recent strength lifted all three major averages to their best levels in over a year last week, although the Nasdaq and S&P 500 have pulled back off their highs. However, overall trading activity remained somewhat subdued, as traders looked ahead to the Federal Reserve's monetary policy decision on Wednesday. With the Fed widely expected to raise interest rates by another 25 basis point, traders are likely to pay close attention to the accompanying statement for clues about the outlook for rates. Recent encouraging inflation data has led to optimism this week's rate hike will be the last, and traders will be looking for confirmation from the Fed. Meanwhile, a lack of major U.S. economic data may have kept some traders on the sidelines ahead of the release of several key reports in the coming days. On the sectoral front, steel stocks moved sharply higher over the course of the session, driving the NYSE Arca Steel Index up by 2.5 percent to its best closing level in over four months. Considerable strength was also visible among energy stocks, which moved notably higher along with the price of crude oil. Banking stocks also showed a significant move to the upside, resulting in a 1.7 percent jump by the KBW Bank Index. With the gain, the index reached a four-month closing high.

Crude oil futures settled higher on Monday, magnifying previous session's rally. Export cuts by Saudi Arabia and Russia and geopolitical tensions after news about Russia's bombing of Ukrainian grain export facilities contributed to the rise in oil prices. Further, oil prices also gained on expectations of further stimulus in China. Meanwhile, the Federal Reserve's interest-rate decision is due on Wednesday, followed by the European Central Bank (ECB) on Thursday and the Bank of Japan (BOJ) on Friday. Benchmark crude oil futures for September delivery rose $1.67 or about 2.2 percent to settle at $78.74 a barrel on the New York Mercantile Exchange. Brent crude for September delivery surged $1.67 or about 2.05 percent to settle at $82.74 a barrel on London's Intercontinental Exchange.

Indian rupee ended higher against dollar on Monday, as a sharp jump in India's forex reserves boosted investor sentiments. Reserve Bank of India said India's forex reserves have swelled by $12.743 billion to $609.022 billion in the week ended July 14, making it one of the strongest weekly surges in the kitty in recent times. On the global front, the pound headed for a seventh straight day of losses on Monday against the dollar, its longest losing streak since the onset of the pandemic in 2020, after a survey showed Britain's private sector growing at its slowest pace in six months in July. Besides, Euro slid on Monday after activity data in key economies came in much softer than expected, giving markets a jolt at the start of a week packed with central bank meetings at which investors expect rate hikes in Europe and the United States. Finally, the rupee ended at 81.83 (Provisional), stronger by 15 paise from its previous close of 81.98 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 10399.98 crore against gross selling of Rs 11805.05 crore, while un the debt segment, the gross purchase was of Rs 1590.04 crore with gross sales of Rs 1364.82 crore. Besides, in the hybrid segment, the gross buying was of Rs 5.65 crore against gross selling of Rs 7.72 crore.

The US markets ended higher on Monday as Chevron reported better-than-expected earnings and data showed that U.S. business activity grew at its slowest pace in five months in July. Asian markets are trading mostly in green on Tuesday with Chinese and Hong Kong markets rallying, after China's Politburo pledged to adjust and optimize policies in a timely manner for its ailing property sector. Indian markets ended in red for the second straight day on Monday owing to losses in index heavyweights ITC and Reliance Industries. Today, start of session is likely to be cautious amid rise in crude oil prices overnight as well as foreign fund outflows likely to dent domestic sentiments. Provisional data from the National Stock Exchange (NSE) showed that foreign institutional investors (FII) sold shares worth Rs 82.96 crore on July 24. Traders will be concerned with a private report that the recent rise in inflation has prompted Indian investors to push back rate cut expectations by at least a quarter to the middle of 2024, with a sustained rise in prices likely to prompt a further repricing. There will be some cautiousness with a private report that Indian fintech start-ups raised a total of $1.4 billion in the first half (H1) of 2023, a massive year-on-year (YoY) drop of 67 per cent from $4.3 billion raised in the same period last year. Traders may take note of the commerce ministry's statement that India and the UK have concluded the 11th round of negotiations for a proposed free trade agreement (FTA) and the next round of talks will take place in the coming months. Meanwhile, the Securities and Exchange Board of India (Sebi) is working on an ambitious plan to settle secondary market trades on a real-time basis. Aviation industry stocks will be in focus as the government of India granted in-principle approval for the establishment of 21 new Greenfield Airports. These airports will be set up in different regions of the country to enhance connectivity and boost air travel accessibility. There will be some reaction in infrastructure industry stocks with report that the prices of TMT rebars -- a key requirement for infrastructure projects -- are trading at 24-month low levels and the trend is expected to continue for the next few quarters. Besides, the April-June quarter results (Q1FY24) will remain in limelight. On July 25, companies like Bajaj Auto, Tata Motors, Larsen & Toubro, Asian Paints, among many others will report the June quarter results.

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

Nifty Top volumes

• HDFC Bank is eyeing 17-18 per cent loan growth during the current financial year as there is enough credit demand. 
• TCS has helped AIB life launch operations in Ireland with a future-ready, digitally enabled, platform that supports its vision to help people on their path to financial security, one step at a time. 
• HDFC Life Insurance has reported 15.31% rise in consolidated net profit at Rs 416.72 crore for Q1FY24 as compared to Rs 361.40 crore for the same quarter in the previous year. 
• The Mahindra Group is poised to help American companies enhance their international footprint and expand by leveraging the advantages of India as a manufacturing hub.