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Indian equity benchmarks closed at record closing highs on Monday led by gains Metal, Energy and Oil & Gas stocks. Benchmarks started session on a sluggish note, as traders were cautious with a private report stated that it is highly unlikely that India will become a $5 trillion economy by 2024-25 due to the slowdown caused by the COVID-19 pandemic. Besides, India recorded 33,221 new Covid-19 cases and 421 deaths in the past 24 hours, taking its tally to 32,225,175 and the death toll to 431,674. However, key indices recovered from early losses as the data released by the commerce ministry showed that the country's exports surged 49.85 per cent to $35.43 billion in July on account of healthy growth in petroleum, engineering, and gems and jewellery segments, even as the trade deficit widened to $10.97 billion during the month. Some support also came as RBI data showed country's foreign exchange reserves increased by $889 million to a lifetime high of $621.464 billion in the week ended August 6, 2021.

Trading sentiments remained positive in late afternoon deals, as India's annual wholesale price inflation eased to 11.16% in July from the previous month's 12.07%, helped by lower increases in the cost of fuel and food items. A low-base effect also contributed to the WPI inflation in July, since it stood at minus 0.25% in the corresponding month of 2020. Traders got some support with ICRA Ratings’ report stated that most states are likely to be in better fiscal health this financial year as 20 of them are collectively carrying forward Rs 2.6 lakh crore borrowed in FY21 to this fiscal. It said this also explains why the states have been borrowing less so far this year despite the pandemic-driven revenue crunch and the soaring public expenses towards health and food.  Traders also remained positive as Prime Minister Narendra Modi announced an ambitious Rs 100 lakh crore holistic infrastructure development program 'Gatishakti', which is aimed at boosting employment opportunities and productivity of industries.

On the global front, Asian markets ended mostly lower on Friday, while European markets were trading lower as data showing a significant drop in U.S. consumer sentiment, China's regulatory curbs, sinking crude oil prices and concerns about the impact of surging cases of the Delta variant of the coronavirus in the region is weighing on investor sentiment and rendering the mood cautious. The surge in the delta variant of the coronavirus and fresh restrictions in several places across the world has also raised uncertainty about the pace of the economic rebound from the pandemic. Back home, on the sectoral front, aviation stocks were in focus as the Directorate General of Civil Aviation (DGCA) said around 50.07 lakh domestic passengers travelled by air in July, 61 per cent higher than the 31.13 lakh who travelled in June. Textile industry’s stocks were in watch as the government notified the RoSCTL scheme for textiles exporters and said the duty credit scrips under this support measure would be issued without insisting on realisation of the export proceeds.

Finally, the BSE Sensex rose 145.29 points or 0.26% to 55,582.58, while the CNX Nifty was up by 33.95 points or 0.21% to 16,563.05.   

The BSE Sensex touched high and low of 55,680.75 and 55,281.02, respectively and there were 14 stocks advancing against 16 stocks declining on the index.  

The broader indices ended in red; the BSE Mid cap index fell 0.18%, while Small cap index was down by 0.57%.

The top gaining sectoral indices on the BSE were Metal up by 1.79%, Energy up by 1.10%, Oil & Gas up by 0.88%, FMCG up by 0.23%, Finance up by 0.23%, while Telecom down by 0.99%, Auto down by 0.75%, Consumer Durables down by 0.71%, Capital Goods down by 0.67% and Power down by 0.59% were the top losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 3.96%, Bajaj Finance up by 3.64%, Mahindra & Mahindra up by 2.64%, Bajaj Finserv up by 1.33% and Reliance Industries up by 1.29%. On the flip side, Maruti Suzuki down by 2.43%, Bajaj Auto down by 2.05%, Power Grid Corporation down by 2.00%, Ultratech Cement down by 1.55% and SBI down by 1.51% were the top losers.

Meanwhile, ICRA Ratings in its latest report has said that most states are likely to be in better fiscal health this financial year as 20 of them are collectively carrying forward Rs 2.6 lakh crore borrowed in FY21 to this fiscal. It said this also explains why the states have been borrowing less so far this year despite the pandemic-driven revenue crunch and the soaring public expenses towards health and food.

According to the report, given the pandemic and the resultant financial crunch, the Centre allowed states to borrow up to 5 per cent of their gross state domestic product (GSDP) -- resulting in an aggregate borrowing of Rs 8.5 lakh crore -- in FY21 as they faced massive drop in revenues and higher expenses towards supporting the people hit by the lockdowns. It also noted that as of August 10, when the state debt was auctioned last, the borrowings by the states so far in FY22 has been 11 per cent less year-on-year and 15 per cent lower than the amounts shown in the indicative auction calendar.

The report further said for the current fiscal, of the normal net borrowing ceiling of 4 per cent of GSDP set by the Centre for 28 states at Rs 8.5 trillion, 3.5 per cent of FY22 GSDP is unconditional and the rest 0.5 per cent (Rs 1.1 lakh crore) is contingent on them meeting incremental capital expenditure in FY22. It pointed out that the size of this unutilised borrowing in FY21 as a proportion of FY22 GSDP exceeds 0.5 per cent of GSDP for 15 states, reducing their likely dependence on the conditional borrowing of 0.5 per cent. It added that this will help these states that need to incur a larger revenue deficit in FY22 but are unable to step up their capital spending by the required magnitude of 0.5 per cent of GSDP.

The CNX Nifty traded in a range of 16,589.40 and 16,480.75 and there were 21 stocks advancing against 29 stocks declining on the index.    

The top gainers on Nifty were Tata Steel up by 3.67%, Bajaj Finance up by 3.35%, Mahindra & Mahindra up by 2.65%, Britannia Industries up by 2.47% and Indian Oil Corporation up by 2.29%. On the flip side, Maruti Suzuki down by 2.60%, Shree Cement down by 2.26%, Eicher Motors down by 2.23%, Power Grid Corporation down by 2.00% and Bajaj Auto down by 1.98% were the top losers.

European markets were trading higher; UK’s FTSE 100 decreased 82.18 points or 1.14% to 7,136.53, France’s CAC fell 69.92 points or 1.01% to 6,826.12 and Germany’s DAX was 94.56 points or 0.59% to 15,882.88.

Asian markets settled mostly lower on Monday after the world’s second-largest economy recorded slow growth in both factory output and retail sales and missed expectations in July, while worries about worsening coronavirus infections in the Asian region also dampened market sentiments. Japanese shares ended lower due to concerns of slow economic growth following the highly contagious Delta variant of Covid-19, while stronger yen also fuelled selling. However, Chinese shares ended marginally higher after China's central bank, PBoC injected 600 billion yuan ($92.63 billion) in medium-term loans into the financial system and keeping the interest rate unchanged for the 16th month in a row. Meanwhile, the Korean market was closed due to the national holiday, Liberation Day.

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