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Indian equity benchmarks snapped their two-day losing streak and ended the session in green terrain on Monday led by gains in TECK, IT and Telecom stocks. Indices opened a day with gap up, as traders took encouragement with the government stating that the country’s agri-exports are estimated to grow 15% in FY22, adding that export of products like rice, meat, cereals and dairy items rose 44.3% on-year to $4.81 billion during April-June 2021. Their exports were $3.33 billion in the year ago period. Sentiments were upbeat as investments in the Indian capital markets through participatory notes (P-notes) rose to Rs 1.02 lakh crore till July-end, making it the highest level in last 40 months. This also marks the fourth consecutive monthly growth. However, benchmarks soon erased gains as traders got anxious with RBI Governor Shaktikanta Das’ statement that the resurgence in inflation in May and June above the upper threshold has reignited the debate on the appropriate monetary policy response. Some concern also came as RBI data showed India's foreign exchange reserves decreased by $2.099 billion to stand at $619.365 billion for the week ended August 13 due to a fall in core currency assets and gold.

During the late morning session, key indices came back in green, as Crisil Ratings revised the credit quality outlook of India Inc for fiscal 2022 to positive from cautiously optimistic earlier, predicated on a sustained recovery in demand after the blip caused by the second wave of Covid-19 afflictions in the first quarter. The increase in coverage of vaccinations should also mitigate the impact of a third wave if it comes about. In another positive development, , Retirement fund body, Employees' Provident Fund Organisation (EPFO) in its latest ‘Provisional Estimate of Net Payroll’ data report has showed that India created 1283448 new jobs in the month of June 2021. Traders took a note of Icra Ratings’ report that despite the massive windfall gains from fuel taxes and GST collections, the Centre continues to borrow heavily from the market, with the total drawdown crossing 90 per cent of the notified amount so far or 46 per cent of the total borrowings for FY22, even though the second quarter is only halfway .

On the global front, European markets were trading lower even as a survey showed activity in Germany's manufacturing and services sectors expanded in August. Growth in French business activity eased in the month, while the Eurozone manufacturing PMI came in at 61.5 versus 62.0 expected and 62.8 last. Asian markets ended mostly higher on Friday, as investors anxiously awaited the Federal Reserve's annual Jackson Hole conference later in the week for cues on possible asset purchase tapering timeline.  Back home, on the sectoral front, metal stocks were in limelight as Icra in its report said that with demand uptick stemming from the government’s thrust on infrastructure, mainly in the rural markets, capacity utilisation for medium and small long steel product manufacturers is expected to improve in the coming quarters.  Fertiliser industry’s stocks too were in focus as rating agency ICRA said primary fertiliser sales volume during first four months of FY22 registered 11 per cent decline compared to 4M FY21, mainly due to the base effect as during H1 FY21 fertiliser sales witnessed an upsurge owing to panic buying by farmers following Covid-19 pandemic led lockdown.

Finally, the BSE Sensex rose 226.47 points or 0.41% to 55,555.79, while the CNX Nifty was up by 45.95 points or 0.28% to 16,496.45.   

The BSE Sensex touched high and low of 55,781.17 and 55,240.29, respectively and there were 15 stocks advancing against 15 stocks declining on the index.   

The broader indices were trading in red; the BSE Mid cap index was down by 0.90%, while Small cap index down by 1.55%.

The top gaining sectoral indices on the BSE were TECK up by 1.26%, IT up by 1.16%, Telecom up by 0.89%, Energy up by 0.62%, Oil & Gas up by 0.55%, while Basic Materials down by 1.52%, Auto down by 1.26%, Industrials down by 1.18%, Consumer Disc down by 1.12%, Realty down by 0.85% were the top losing indices on BSE.

The top gainers on the Sensex were HCL Technologies up by 4.10%, TCS up by 2.20%, Bajaj Finserv up by 2.06%, Nestle up by 1.78% and Bharti Airtel up by 1.57%. On the flip side, Mahindra & Mahindra down by 2.50%, Bajaj Auto down by 2.23%, Ultratech Cement down by 1.88%, Power Grid Corporation down by 1.57% and ITC down by 1.29% were the top losers.

Meanwhile, given the uncertainties due to the COVID-19 pandemic, Reserve Bank of India (BRI) Governor Shaktikanta Das has opined that continued policy support with a focus on revival and sustenance of growth was the most desirable and judicious policy option at the moment. Das, according to the minutes of the MPC meeting released, also underlined the need for closely monitoring the price situation with a view to anchoring inflation expectations.

He said ‘the need of the hour is twofold: first, continue the monetary policy support to the economy; and second, remain watchful of any durable inflationary pressures and sustained price momentum in key components so as to bring back the CPI inflation to 4 per cent over a period of time in a non-disruptive manner.’

All members of the Monetary Policy Committee (MPC) -- Shashanka Bhide, Ashima Goyal, Jayanth R Varma, Mridul K Saggar, Michael Debabrata Patra and Shaktikanta Das -- had unanimously voted to keep the policy repo rate unchanged at 4 per cent after the three-day meet of the panel earlier this month. Further, except Varma, other members voted to continue with the accommodative stance as long as necessary to revive and sustain growth on a durable basis and continue to mitigate the impact of COVID-19 on the economy, while ensuring that inflation remains within the target going forward.

The CNX Nifty traded in a range of 16,592.50 and 16,395.70 and there were 8 stocks advancing against 42 stocks declining on the index.  

The top gainers on Nifty were HCL Technologies up by 4.26%, TCS up by 2.12%, Nestle up by 2.02%, Bajaj Finserv up by 1.88% and ONGC up by 1.59%. On the flip side, Grasim Industries down by 3.14%, Adani Ports &SEZ down by 2.78%, Mahindra & Mahindra down by 2.63%, Eicher Motors down by 2.33% and Bajaj Auto down by 2.25% were the top losers.  

European markets were trading lower; UK’s FTSE 100 increased 34.41 points or 0.49% to 7,122.31, France’s CAC increased 58.04 points or 0.88% to 6,684.15 and Germany’s DAX increased 40.15 points or 0.25% to 15,848.19.

Asian markets settled mostly higher on Monday despite lingering concerns over the fast-spreading Covid-19 Delta variant globally. Investors are anxiously awaiting the Federal Reserve's annual Jackson Hole conference later in the week for cues on possible asset purchase tapering timeline. Chinese shares ended higher after Chinese health authorities reported that no new local Covid-19 cases for the first time since July. Moreover, Japanese shares gained on solid corporate earnings, while auto-related stocks also rebounded from losses stoked by Toyota Motor's announcement of slashing global output by 40 percent next month on chip shortage.

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