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Indian equity benchmarks recouped most of their losses to end flat with a negative bias on Monday, amid heavy selling in TECK, IT and Capital Goods stocks and weak trend in Asian markets. Key gauges made negative start and stayed weak for the better part of the day, as traders got anxious with a private report stating that India's headline retail inflation rate is expected to be 7 percent in June, largely unchanged from 7.04 percent in May, with a sharp pick-up in vegetable prices likely nullifying the impact of the decline in prices of other food items. Some pessimism came in as foreign investors continued to desert Indian equity markets and have pulled out over Rs 4,000 crore this month so far amid steady appreciation of the dollar and rising interest rates in the US.

Weak trade continued over the Dalal Street in late afternoon session with private report stated that after three consecutive quarters of raising more than $10 billion, the total funding in the Indian startup ecosystem fell by 40 percent during Q2 CY22 to reach $6.8 billion. The decline can be attributed to a global slowdown, decrease in tech stock valuations, inflation and geopolitical instability. However, the domestic markets managed to pare most of losses in final hour of trade, taking support from RBI Governor Shaktikanta Das exuded confidence that the price situation will gradually improve in the second half of the current fiscal, and the central bank would continue to take monetary measures to anchor inflation with a view to achieving strong and sustainable growth. Traders also took a note of Prime Minister Narendra Modi’s statement that real growth was not possible without inclusiveness as he listed out various measures taken by his government during the last eight years to ensure that benefits of growth reach all sections of the society.

On the global front, European markets were trading lower as the euro held above parity versus the dollar, adding to worries that corporate profits could come under pressure.  Asian markets ended mostly lower on Monday as upbeat U.S. jobs data rekindled worries over aggressive policy tightening and parts of China's financial hub faced more rounds of mass testing to fight rising COID-19 infections. Shanghai reported its first case of the highly infectious BA.5 omicron sub-variant on Sunday and warned of 'very high' risks, raising fears about more lockdowns.

Back home, sugar industry stocks were in focus as the government said India has extended by two weeks a deadline for the export of 800,000 tonnes of sugar as annual monsoon rains make it tough for many producers to move stocks from factories to ports. Agriculture industry related stocks were in watch as the agriculture ministry data showed the area under coverage for paddy declined 24 per cent to 72.24 lakh hectares so far in the ongoing Kharif sowing season, while oilseeds acreage is lower by 20 per cent at 77.80 lakh hectares because of delay in the progress of monsoon rains in some parts of India. Leather industry stocks were buzzing, as country's exports of leather and leather products would cross $6 billion in 2022-23 on account of growing demand for these products in global markets.

Finally, the BSE Sensex fell 86.61 points or 0.16% to 54,395.23 and the CNX Nifty was down by 4.60 points or 0.03% to 16,216.00.

The BSE Sensex touched high and low of 54,527.90 and 54,090.53, respectively. There were 15 stocks advancing against 15 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index rose 0.63%, while Small cap index was up by 1.07%.

The top gaining sectoral indices on the BSE were Power up by 4.21%, Utilities up by 4.17%, Oil & Gas up by 1.97%, Energy up by 1.84% and Metal up by 1.68%, while TECK down by 3.08%, IT down by 2.70%, Capital Goods down by 0.38% and Telecom down by 0.06% were the top losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 3.04%, Mahindra & Mahindra up by 2.86%, Dr. Reddy's Lab up by 2.25%, ICICI Bank up by 1.83% and Asian Paints up by 1.80%. On the flip side, Bharti Airtel down by 5.03%, TCS down by 4.64%, HCL Technologies down by 4.10%, Infosys down by 2.72% and Wipro down by 1.91% were the top losers.

Meanwhile, Former Securities and Exchange Board of India (SEBI) chief Ajay Tyagi has stressed on the need for developing a low- and medium-rated corporate bond market. The move that will help more number of issuers across the rating spectrum to tap into it as an alternative to bank financing. Apart from the bond market, he focused on two broad areas -- use of technology and ESG investing, which is no longer just a fad or a buzzword.

Although he said the corporate bond market has grown in recent years, its success has remained limited to higher rated papers. As of now, 95 per cent of issuance is concentrated in top 3 rating categories -- AAA, AA+ and AA. Similarly, 97 per cent of trading is in these top three rating categories.

For the development of the bond market, he suggested that the government and regulators should immediately implement measures like backstop facility for purchase of debt securities, credit enhancement mechanism and setting up a Development Financial Institution (DFI) for debt financing of infrastructure. He stated these measures, which have been in the pipeline for quite some time, need to be implemented by the government and regulators without further delay. He also advocated for unifying the regulatory regime for government securities (G-Secs) and corporate bonds -- both for issuance and trading.

The CNX Nifty traded in a range of 16,248.55 and 16,115.50. There were 28 stocks advancing against 22 stocks declining on the index.

The top gainers on Nifty were Eicher Motors up by 4.00%, ONGC up by 3.25%, Tata Steel up by 3.05%, Dr. Reddy's Lab up by 2.74% and Mahindra & Mahindra up by 2.68%. On the flip side, Bharti Airtel down by 5.12%, TCS down by 4.70%, HCL Technologies down by 4.33%, Infosys down by 2.90% and BPCL down by 2.87% were the top losers.

European markets were trading lower; UK’s FTSE 100 decreased 38.67 points or 0.54% to 7,157.57, France’s CAC decreased 40.41 points or 0.67% to 5,992.72 and Germany’s DAX decreased 102.97 points or 0.79% to 12,912.26.

Asian markets ended mostly lower on Monday as stronger-than-expected jobs data fueled expectations of another 75-bps rate hike at the upcoming US Fed meeting later this month. Data showed that US non-farm payroll employment jumped by 372,000 jobs in June against forecast of 268,000 jobs, while the jobless rate stabilized at its historically low level of 3.6%. Chinese shares declined after Shanghai reported its first case of the highly infectious BA.5 omicron sub-variant and warned of very high risks, raised fears about more lockdowns. Meanwhile, markets are awaiting Chinese exports and imports data due on Wednesday. Hong Kong shares fell as Chinese technology firms Alibaba and Tencent Holdings led the declines after Chinese regulators fined their subsidiaries for not reporting past transactions as required. However, Japanese shares gained as investors cheered a landslide parliamentary election victory by the ruling Liberal Democratic Party.

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