Indian equity benchmarks snapped their 6-day winning run and ended lower by over half percent on Monday dragged by Auto, Energy and Telecom shares. Markets made a weak start and stayed in red for whole day, as traders got anxious with a private report that Indian rupee may further depreciate to 82 to a dollar in the near term due to widening of trade deficit and expected aggressive rate hike by the US Fed later this week to tame record high inflation. The mood on the street remained cautious with India Ratings' report stated that the banks are unlikely to take a big hit on profitability this quarter due to rising bond yields, which may eat up 5.3 per cent (Rs 11,790 crore) of their net income in the worst-case scenario. It also said that in the worst-case scenario, banks may see a profit erosion of 2.6 per cent of their pre-provisioning operating profit and 5.3 per cent of their post-tax profit from treasury losses in Q1. However, key indices managed to trim some losses in late afternoon deals, taking support from Finance Minister Nirmala Sitharaman's statement that the trust-based taxation system introduced by the government has resulted in improved collections and increase in the number of return filings. Traders took note of Reserve Bank of India Governor Shaktikanta Das' statement that the central bank will ensure that the economy has a soft landing wherein inflation is closer to 4 per cent, with minimal impact on growth. But, markets failed to hold recovery and ended lower, as India's foreign exchange (forex) reserves slumped by $7.541 billion to $572.712 billion for the week ended July 15, the lowest level in 20 months, as the Reserve Bank of India (RBI) likely used its war chest to defend the rupee, which recently dipped below 80 against a dollar. This is the second consecutive week of the sharp drop in the country's forex reserves. Some concern also came as the government is not considering extending the last date for filing income tax returns as it expects most returns to come in by the due date of July 31. Revenue Secretary Tarun Bajaj said over 2.3 crore income returns were filed by July 20 for fiscal 2021-22 and the numbers are picking up. Finally, the BSE Sensex fell 306.01 points or 0.55% to 55,766.22 and the CNX Nifty was down by 88.45 points or 0.53% to 16,631.00.

The US markets ended mostly in green on Monday after a choppy session as investors largely stayed cautious, looking ahead to some key earnings updates, the GDP data and the Federal Reserve's monetary policy announcement. The Fed, which is scheduled to announce its interest rate decision on Wednesday, is widely expected to announce another 75-basis points hike. Tech stocks fell on the heels of a warning by Snap, which reported disappointing earnings last week causing investors to worry about declining digital ad spending in the current economic climate. Meta Platforms dropped 1.5%, and Amazon slipped by 1.1%. Apple, Microsoft and Alphabet ended slightly lower. Elsewhere, shares of Newmont Corporation slid 13.2% after the mining company reported a quarterly loss that was down nearly 41% from a year ago, hurt by a drop in gold prices. Philips tumbled 7.2% after the Dutch medical equipment maker reported weaker-than-expected quarterly earnings, citing lockdowns in China and supply chain issues. However, energy stocks were the best performing sector as oil prices rose. Marathon Oil and APA Corp each jumped about more than 6%. Diamondback Energy, Occidental Petroleum, Devon Energy and Valero gained about 5% each. Chevron was the top gainer in the Dow, up nearly 3%.

Crude oil futures ended higher on Monday as a dip in the US dollar.  Further, oil prices got support as concerns about outlook for energy demand eased slightly on news new Covid-19 cases in China dropped to the lowest level in more than a week. Meanwhile, Libya's National Oil Corporation said it aimed to bring back production to 1.2 million barrels per day (bpd) in two weeks, from around 860,000 bpd, many are of the view that output from Libya will likely remain volatile due to tensions over clashes between rival political factions over the weekend. Benchmark crude oil futures for September delivery surged $2.00 or about 2.1 percent to settle at $96.70 a barrel on the New York Mercantile Exchange. Brent crude for September delivery rose $1.94 or 1.9 percent to settle at $105.15 a barrel on London's Intercontinental Exchange.

Indian rupee ended higher against dollar on Monday as banks and exporters continued to sell the US currency. Traders took support with Reserve Bank of India Governor Shaktikanta Das' statement that the central bank will ensure that the economy has a soft landing wherein inflation is closer to 4 per cent, with minimal impact on growth. Investors paid no heed toward report that India's foreign exchange (forex) reserves slumped by $7.541 billion to $572.712 billion for the week ended July 15, the lowest level in 20 months, as the Reserve Bank of India (RBI) likely used its war chest to defend the rupee, which recently dipped below 80 against a dollar. On the global front, dollar trade firm on Monday as traders sought safer assets and braced for a sharp U.S. interest rate hike later this week. Finally, the rupee ended at 79.78 (provisional), stronger by 12 paisa from its previous close of 79.90 on Friday.

The FIIs as per Monday's data were net sellers in both equity and debt segment. In equity segment, the gross buying was of Rs 5351.04 crore against gross selling of Rs 5966.13 crore, while in the debt segment, the gross purchase was of Rs 1018.91 crore against gross selling of Rs 1849.27 crore. Besides, in the hybrid segment, the gross buying was of Rs 12.45 crore against gross selling of Rs 26.41 crore.

The US markets ended mostly higher on Monday as investors girded for an expected rate hike at a Fed meeting this week and earnings from several large-cap growth companies. Asian markets are trading mostly in green on Tuesday mirroring the trend on Wall Street overnight. Indian markets halted a winning run on Monday and ended lower dragged by losses in oil & gas, auto and financial shares though gains in metal stocks lent some support. Today, markets are likely to get a weak start amid volatile global sentiments ahead of the US Federal Reserve's rate action trajectory coupled with rise in crude oil prices overnight. Traders will be concerned as Minister of State for Finance Pankaj Chaudhary said the Central government's total liabilities are seen rising to Rs 155.33 lakh crore in FY23. This would represent an increase of 12 percent over the FY22 figure of Rs 138.88 lakh crore. The Centre is set to borrow a record Rs 14.95 lakh crore on a gross basis from the market through the issuance of bonds in FY23. Some cautiousness will come as foreign portfolio investors (FPIs) turned sellers of domestic stocks to the tune of Rs 844.78 crore, data available with NSE suggested. Besides, a Sebi-panel has cautioned the public against dealing in the properties of PACL Group and its subsidiaries, saying no one has been authorised to sell the properties. However, some support may come later in the day with a private report stating that India is poised to be the fastest-growing major economy in the world and an engine of global growth despite global headwinds. Traders may take note of Commerce Minister Piyush Goyal's statement that India is on the path to become a $30 trillion economy in the next 30 years on the back strong GDP growth. He added that India is currently $3-3.5 trillion economy and soon will achieve $5 trillion. Meanwhile, Income Tax Department has said that more than 3 crore returns have been filed through e-filing portal till date for the financial year 2021-22. There will be some buzz in defence industry stocks as the government said India has received around Rs 494 crore of foreign direct investment in the defence sector since revising the policy relating to it in September 2020. Coffee industry stocks will be in focus with a private report that the Centre plans to repeal the existing 80-year old Coffee Act and has proposed a new Coffee (Promotion and Development Bill), 2022 to promote development of the Indian coffee industry. Investors awaited more of corporate earnings from India Inc for cues, with Asian Paints and Bajaj Auto due to report their numbers later in the day.

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

Nifty Top volumes

• Oil and Natural Gas Corporation has entered into gas sale agreements with GAIL India and AGCL to monetise its upcoming field at Khubal in North Tripura district.
• ICICI Bank has reported a rise of 55.05% in its consolidated net profit at Rs 7,384.53 crore for Q1FY23 as compared to Rs 4,762.77 crore for the same quarter in the previous year. 
• Hindustan Unilever is planning to invest Rs 700 crore by 2025 at its new unit, a state-of-the-art spray dried detergent factory and co-located distribution centre in Bundelkhand.
• HDFC is planning to raise up to Rs 11,000 crore by issuing secured redeemable non-convertible debentures.