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Indian equity benchmarks extended their gains to the third day in a row on Monday, clinching record closing highs, amid firm global market setup. Indices opened the day with a good gap but showed a range-bound session. Traders took some encouragement with a private report that recovering from the economic slump caused by the pandemic, hiring trends saw an improvement in August. The previous month saw a 26% on-year increase in hiring activity to 2.78 lakh. Some support also came as the RBI data showed that the country's foreign exchange reserves soared by $16.663 billion to touch a lifetime high of $633.558 billion in the week ended August 27, mainly due to an increase in Special Drawing Rights (SDR) holdings. Traders found some solace with a private report that the government's collections from levy of excise duty on petroleum products have jumped 48 per cent in the first four months of the current fiscal year, with the incremental mop-up being 3-times of the repayment liability of legacy oil bonds in the full fiscal.

During the second half of the session, markets continued to trade in positive zone taking support from the Income Tax Department of India stating that the Central Board of Direct Taxes (CBDT) has issued refunds of over Rs 67,401 crore to more than 23.99 lakh taxpayers between April 1 and August 16. It further said that the income tax refunds of Rs 16,373 crore have been issued in 22,61,918 cases and corporate tax refunds of Rs 51,029 crore have been issued in 1,37,327 cases. Traders also took note of member of the Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) -- Shashanka Bhide’s statement that revival of the Indian economy would be sustained if the COVID-19 pandemic is under control.  Bhide added that prioritising expenditure to get maximum employment and income effects while controlling the pandemic are necessary in the short term. Separately, with an aim to increase exports through quality production and processing, Agricultural and Processed Food Products Export Development Authority (APEDA) has signed a Memorandum of Understanding (MoU) with ICAR-Indian Institute of Millet Research (ICAR-IIMR) which is expected to boost value addition and farmers’ income.

On the global front, Asian markets ended mostly higher on Monday as weak U.S. hiring in August fueled expectations the Federal Reserve would not rush in tapering its asset buying plans in the September meeting. European markets were trading higher amid optimism that curbs to central bank stimulus will be delayed amid signs of a slowdown in global growth due to rampant COVID spread. Back home, on the sectoral front, textile industry stocks were in focus as Textiles Minister Piyush Goyal said the value of textile exports should be increased to $100 billion from $33 billion currently. There was some reaction in coal industry stocks as the union power ministry agreed to changes in the guidelines for SHAKTI scheme in order to make more coal available to power plants that do not have any power purchase agreement (PPA).

Finally, the BSE Sensex rose 166.96 points or 0.29% to 58,296.91, while the CNX Nifty was up by 54.20 points or 0.31% to 17,377.80. 

The BSE Sensex touched high and low of 58,515.85 and 58,200.29, respectively and there were 12 stocks advancing against 18 stocks declineng on the index.   

The broader indices ended in green; the BSE Mid cap index rose 0.18%, while Small cap index was up by 0.59%.

The top gaining sectoral indices on the BSE were Realty up by 2.97%, IT up by 1.48%, Consumer Durables up by 1.43%, TECK up by 1.25%, Energy up by 0.78% while, Oil & Gas down by 0.66%, Utilities down by 0.52%, Power down by 0.52%, Bankex down by 0.42% and Telecom down by 0.38% were the top losing indices on BSE.

The top gainers on the Sensex were HCL Technologies up by 2.17%, Infosys up by 1.75%, Reliance Industries up by 1.52%, Tech Mahindra up by 0.93% and Bajaj Auto up by 0.74%. On the flip side, Indusind Bank down by 1.13%, Kotak Mahindra Bank down by 0.86%, Power Grid Corporation down by 0.71%, Sun Pharma down by 0.62% and Asian Paints down by 0.61% were the top losers.

Meanwhile, a member of the Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) -- Shashanka Bhide has said that revival of the Indian economy would be sustained if the COVID-19 pandemic is under control.  Bhide added that prioritising expenditure to get maximum employment and income effects while controlling the pandemic are necessary in the short term. He said high inflation is a crucial concern and macroeconomic stability can be achieved when there is moderate level of inflation.

Further, he said there are clear positive signs given what the economy has suffered due to the COVID-19 pandemic, not only from the direct impact but also the repercussions from the set back to the economies around the world. He noted the positive signs are indeed the recovery in the output levels from the lows that we saw in Q1: 2020-21 and then the fall again during the course of the second surge of the pandemic in April-May 2021.

According to Bhide, given that two of the three months of the first quarter of 2021-22 were in fact peaks for the severity of the pandemic, the economy appears to have managed to learn from the previous experience. The Indian economy grew by a record 20.1 per cent in the April-June quarter, helped by a very weak base of last year and a sharp rebound in the manufacturing and services sectors in spite of a devastating second wave of COVID-19.

The CNX Nifty traded in a range of 17,429.55 and 17,345.55 and there were 24 stocks advancing against 26 stocks declining on the index.   

The top gainers on Nifty were Wipro up by 4.95%, HCL Technologies up by 2.66%, Infosys up by 1.80%, Reliance Industries up by 1.70% and Hindalco up by 1.63%. On the flip side, Indian Oil Corporation down by 1.55%, Indusind Bank down by 1.19%, ONGC down by 1.18%, Britannia Industries down by 1.07% and Kotak Mahindra Bank down by 0.94% were the top losers.

European markets were trading higher; UK’s FTSE 100 increased 49.11 points or 0.69% to 7,187.46, France’s CAC increased 48.88 points or 0.73% to 6,738.87 and Germany’s DAX increased 103.63 points or 0.66% to 15,884.83.

Asian markets ended mostly higher on Monday as disappointing US hiring data in August fuelled expectations the US central bank would not rush in tapering its asset buying plans in the September meeting. Data showed that US economy added just 235,000 jobs in August, compared to an estimate of 750,000. Chinese shares gained after Chinese President Xi Jinping announced plans to set up a new stock exchange in Beijing, a primary platform for smaller firms to meet their financing needs, while investors awaited cues from China's trade and inflation data due out later in the week. Japanese shares rose on optimism that the Cabinet of Japanese Prime Minister Suga Yoshihide's successor would strengthen corona-virus measures and provide economic relief.

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