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Indian equity benchmarks extended their gains for the sixth consecutive session and ended over half a percent higher on Friday led by gains in Banking, Basic Materials and FMCG stocks.  Key gauges made positive start and stayed in green for whole day, as provisional data available on the NSE showed that Foreign institutional investors (FIIs) have net purchased shares worth Rs 1,799.32 crore, continuing buying for the fourth consecutive session on July 21. Traders also took note of Commerce Secretary BVR Subrahmanyam’s statement that the negotiations for the India-UK free trade agreement will be concluded by August 31 and ready for signing by Diwali in October.

However, key gauges trimmed some gains in late morning deals, as traders turned cautious with the FICCI’s quarterly survey showed that the Indian economy is expected to expand 7% in fiscal 2022/23, slower than a previous estimate of 7.4% and the central bank's 7.2% projection. The survey said the war in Ukraine is likely to keep inflation high and dent consumer demand. Also, the Asian Development Bank has slashed its growth forecast for India to 7.2 per cent for FY23 from 7.5 per cent estimated earlier citing higher than anticipated inflation since April and subsequent monetary tightening by the central bank.

But, markets gained traction in late afternoon deals, as some optimism remained among traders with Reserve Bank Governor Shaktikanta Das’ statement that the RBI was confident of achieving its growth-inflation aim of ensuring a soft landing for the economy, 'where inflation is brought down closer to the target of 4 percent over a period of time. At the same time, the growth sacrifice is within manageable limits'. Meanwhile, capital markets regulator Sebi has proposed a regulatory framework for the online bond platforms that are selling listed debt securities. Under the proposal, bond platforms should register as stock brokers (debt segment) with the Securities and Exchange Board of India (Sebi) or be run by Sebi-registered brokers.

On the global front, Asian markets settled mostly higher on Friday on receding concerns over the Federal Reserve's aggressive interest-rate hikes. Some support came in as the latest survey from Jibun Bank said the manufacturing sector in Japan continued to expand in July, albeit at a slower pace, with a manufacturing PMI score of 52.2. Traders also digested the latest batch of economic data from the U.S., and the European Central Bank's decision to hike interest rates by 50 basis points, the first rate hike in over a decade. European markets were trading higher even as the latest PMI survey data suggesting slowing growth in the Eurozone.

Back home, banking stocks were in focus as S&P Global Ratings said non-performing loans of banks are expected to decline to 5-5.5 per cent of the total advances by March 2024. In stock specific developments, GSFC soared as its Q1FY23 net profit more-than-doubled to Rs 355.83 crore when compared with Rs 137.76 crore in Q1FY22. Stocks related to pharma sector were in watch as the government launched three schemes to strengthen Micro, Small and Medium Enterprises (MSMEs) in the pharmaceutical sector. The schemes envisage technology upgradation, setting up of common research centres and effluent treatment plants in clusters for the pharma MSMEs.

Finally, the BSE Sensex rose 390.28 points or 0.70% to 56,072.23 and the CNX Nifty was up by 114.20 points or 0.69% to 16,719.45. 

The BSE Sensex touched high and low of 56,186.05 and 55,685.45, respectively. There were 18 stocks advancing against 22 stocks declining on the index.

The broader indices ended mixed; the BSE Mid cap index fell 0.17%, while Small cap index was up by 0.21%.

The top gaining sectoral indices on the BSE were Bankex up by 1.49%, Basic Materials up by 1.26%, FMCG up by 0.43%, Realty up by 0.37%, Auto up by 0.30% while, Power down by 0.93%, TECK down by 0.77%, Utilities down by 0.75%, Telecom down by 0.69%, IT down by 0.69% were the top losing indices on BSE.

The top gainers on the Sensex were Ultratech Cement up by 5.03%, HDFC up by 2.37%, HDFC Bank up by 2.34%, Axis Bank up by 2.14% and ICICI Bank up by 1.74%. On the flip side, Infosys down by 1.73%, NTPC down by 1.19%, Power Grid Corporation down by 0.83%, Wipro down by 0.80% and Indusind Bank down by 0.56% were the top losers.

Meanwhile, Asian Development Bank (ADB) in its supplement to the Asian Development Outlook (ADO) for 2022 said that it has lowered the economic growth forecast for India for current financial year (FY23) to 7.2 per cent, with impacts of COVID-19 and Russia-Ukraine war getting exacerbated by high inflation. In April, it had forecast the Indian economy to grow by 7.5 per cent.

It also revised downwards the economic growth in fiscal ended March 2022 to 8.7 per cent from 8.9 per cent estimated earlier. It stated India’s GDP (Gross Domestic Product) growth moderated to 4.1 per cent in Q4 of fiscal year ended March 2022 on disappointing growth in private consumption and a contraction in manufacturing.

Besides, for the South Asian region, it has lowered the growth forecast from 7 per cent to 6.5 per cent for 2022 and from 7.4 per cent to 7.1 per cent for 2023 mainly due to the economic crisis in Sri Lanka and high inflation and associated monetary tightening in India.

The CNX Nifty traded in a range of 16,752.25 and 16,610.90. There were 27 stocks advancing against 23 stocks declining on the index.

The top gainers on Nifty were Ultratech Cement up by 4.90%, Grasim Industries up by 3.37%, UPL up by 2.85%, HDFC Bank up by 2.47% and HDFC up by 2.39%. On the flip side, Tata Consumer Products down by 1.87%, Infosys down by 1.75%, NTPC down by 1.09%, Power Grid Corporation down by 1.04% and BPCL down by 0.90% were the top losers.

European markets were trading higher; UK’s FTSE 100 increased 17.75 points or 0.24% to 7,288.26, France’s CAC increased 18.29 points or 0.29% to 6,219.40 and Germany’s DAX increased 45.18 points or 0.34% to 13,291.82.

Asian markets settled mostly higher on Friday, supported by overnight gains on Wall Street following receding concerns over US Federal Reserve's aggressive interest rate hikes. Japanese shares gained with hopes for solid corporate earnings, even as Japan's core consumer inflation remained above the central bank's 2 percent target for a third straight month in June. Although, Seoul shares declined after data showed producer prices rose at a faster pace in June, while Europe's larger than expected interest rate hike also fueled concerns about global economic recession. Chinese shares ended flat with negative momentum as the country's cyberspace regulator fined Didi Global $1.2 billion for violating cybersecurity and data laws.

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