Indian equity benchmarks closed with gains of over half percent on Monday paced by strong buying interest in index heavyweights Titan Company, Mahindra & Mahindra and Reliance Industries. Strong trend in other global markets also added to bullish sentiment. Benchmarks opened a day with good gap and managed to hold bullish stream throughout day, as Goods and Services Tax (GST) mop-up grew 33 percent year-on-year in July to over Rs 1.16 lakh crore, indicating that the economy is recovering at a fast pace. This is the second highest collection so far this fiscal after a record Rs 1.41 lakh crore mop-up in April. Sentiments got the boost as the growth of eight core infrastructure industries grew by 8.9 percent in June 2021 as compared to same month last year, mainly due to a low base effect and uptick in production of natural gas, steel, coal and electricity. Some support also came with commerce Minister Piyush Goyal's statement that India and the US are 'natural partners' and services trade will play a critical role in ever-expanding business ties. The minister also said that the services sector holds a lot of promise in aiding India's economic recovery in the post Covid period. Markets sentiment remained bullish in the afternoon session after India's manufacturing sector activities witnessed the strongest rate of growth in three months in July amid improved demand conditions and easing of some local COVID-19 restrictions. The seasonally adjusted IHS Markit India Manufacturing Purchasing Managers' Index (PMI) rose from 48.1 in June to 55.3 in July, pointing to the strongest rate of growth in three months. Traders also remained optimistic after India's unemployment rate fell to a four-month low of 6.95% in July, staging a near-complete recovery in all parameters of the labour markets, which were hit by the second wave of the pandemic. The labour participation rate, unemployment rate and employment rate have all bounced back to close to their March 2021 levels. Meanwhile, data released by the Controller General of Accounts (CGA) showed that the central government's fiscal deficit stood at Rs 2.74 trillion or 18.2 per cent of the full year's Budget estimate at the end of June. The fiscal deficit at the end of June 2020 was 83.2 per cent of the Budget Estimates (BE) of 2020-2 at Rs 6.62 trillion, after a fall in tax receipts due to pandemic lockdown that led to the worst recession in seven decades. Finally, the BSE Sensex rose 363.79 points or 0.69% to 52,950.63, while the CNX Nifty was up by 122.10 points or 0.77% to 15,885.15. 

The US markets ended mostly lower on Monday after a report from the Institute for Supply Management (ISM) showed an unexpected slowdown in the pace of growth in US manufacturing activity in the month of July. The ISM said its manufacturing PMI dipped to 59.5 in July from 60.6 in June. While a reading above 50 still indicates growth in the manufacturing sector, street had expected the index to inch up to 60.9. Meanwhile, a report released by the Commerce Department showed a modest increase in US construction spending in the month of June. The Commerce Department construction spending crept up by 0.1 percent to an annual rate of $1.552 trillion in June after edging down by 0.2 percent to a revised rate of $1.551 trillion in May. Street had expected construction spending to increase by 0.4 percent compared to the 0.3 percent dip originally reported for the previous month. However, the early strength on markets partly reflected recent upward momentum, which has helped lift stocks to new record highs despite concerns about the spread of the delta variant of the coronavirus. Traders remained optimistic about the outlook for the economy amid indications the Federal Reserve is not in a hurry to begin scaling back stimulus. Positive sentiment have also been generated after a bipartisan group of Senators unveiled a nearly $1 trillion infrastructure package.

Crude oil futures ended deeply in red on Monday on rising concerns about the outlook for energy demand after disappointing data on activity in China and the US, worries about the spread of the delta variant of the coronavirus that causes COVID-19 and rising output by OPEC+ producers. In China, data released by the National Bureau of Statistics showed the country's official purchasing managers index fell to 50.4 in July from 50.9 in June. Numbers above 50 indicate expansion. Crude oil futures for September fell $2.69 or 3.6 percent to settle $71.26 barrel on the New York Mercantile Exchange. October Brent crude dropped $2.52 or 3.3 percent to settle at $72.89 a barrel on London's Intercontinental Exchange.

Erasing previous session losses, Indian rupee ended higher against dollar on Monday, on persistent selling of the American currency by exporters. Sentiments were upbeat as India's manufacturing sector activities witnessed the strongest rate of growth in three months in July amid improved demand conditions and easing of some local COVID-19 restrictions. The seasonally adjusted IHS Markit India Manufacturing Purchasing Managers' Index (PMI) rose from 48.1 in June to 55.3 in July, pointing to the strongest rate of growth in three months. On the global front, dollar lurched lower on Monday, back towards the one-month lows hit last week when it became clear the Fed was in no hurry to tighten policy, and policymakers broadly shared Chairman Jerome Powell's view that rate rises were a ways away. Finally, the rupee ended 74.34, stronger by 8 paise from its previous close of 74.42 on Friday.

The FIIs as per Monday's data were net seller in equity segment, while net buyer in debt segment. In equity segment, the gross buying was of Rs 9797.13 crore against gross selling of Rs 12355.01 crore, while in the debt segment, the gross purchase was of Rs 226.09 crore with gross sales of Rs 110.15 crore. Besides, in the hybrid segment, the gross buying was of Rs 101.20 crore against gross selling of Rs 10.14 crore.

The US markets ended mostly lower on Monday on concerns about the Delta variant of the coronavirus. Asian markets are trading mostly in red on Tuesday ahead of the Reserve Bank of Australia's latest interest rate decision. Indian markets ended higher on Monday led by gains in auto, IT and realty stocks amid positive global cues. Today, domestic indices are staring at a negative opening following weakness in global peers. There will be some cautiousness as a periodic labour force survey by the National Statistical Office (NSO) showed that unemployment rate rose to 13.3 per cent in July-September 2020 as compared to 8.4 per cent in the year-ago period. Joblessness or unemployment rate (UR) is defined as the percentage of unemployed persons in the labour force. The UR was 20.9 per cent in April-June 2020, the eighth Periodic Labour Force Survey (PLFS) showed. However, some respite may come as preliminary data released by the commerce and industry ministry showed merchandise exports grew 48 per cent YoY in July to $35.17 billion on account of a rise in global orders in shipments of petroleum products, engineering products, gems and jewellery segments. On a sequential basis, outbound shipments witnessed an 8 per cent jump and grew over 34 per cent as compared to July 2019. Also, a private report stated that Bharat Biotech's Covaxin is effective against the Delta and Delta plus variants. Weekly indicators of economic activity in India are showing signs of improvement as new Covid-19 cases increase. Metal stocks will be in focus as the country's steel output took a hit during the April-June period of 2021 due to the emergence of the second wave of Covid-19 pandemic. Union Steel Minister Ram Chandra Prasad Singh said during the second wave of pandemic, the public and private sector steel plants together supplied 2,30,262 tonnes of liquid medical oxygen (LMO) between April 1 to July 25, 2021. There will be lots of important earnings announcements too, to keep the markets in action. Meanwhile, riding on huge investor interest in the healthcare sector, five pharma companies are tapping the initial public offering (IPO) market over the next couple of weeks to raise over Rs 8,000 crore. The list includes the Rs 4,000-crore IPO by the Bain Capital-backed Emcure Pharma, the Rs 1,500-crore issue by Vijaya Diagnostic Centre, diagnostic firms Krsnaa Diagnostics (Rs 1,200 crore) and Supriya Lifesciences (Rs 1,200 crore), and Windlass Biotech's Rs 400 crore issue.

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

Nifty Top volumes

• HDFC has reported a rise of 39.51% in its consolidated net profit attributed to the owners of the corporation at Rs 5,041.17 crore for Q1FY22 as compared to Rs 3,613.60 crore for Q1FY21.  
• Tata Motors' wholly owned subsidiary -- Jaguar Land Rover has commenced bookings for new Jaguar F-TYPE R-Dynamic Black in India. 
• Tata Steel Kalinganagar, the state-of-the-art steel plant located in Jajpur District of Odisha, has introduced a new Robotic system for its Wagon Tippler operation. 
• TCS has helped Wabtec Corporation successfully complete the complex post-merger integration of GE Transportation's core systems within the stipulated time.