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Indian markets touched fresh three-month peaks on Friday, surging for the third session in a row, led by gains across most sectors. Today, domestic indices are likely to start new month in green amid supportive global cues and strong inflows from foreign investors. After nine consecutive months of relentless selling, foreign investors have turned net buyers and invested nearly Rs 5,000 crore in Indian equities in July on softening dollar index and good corporate earnings. Traders will be taking encouragement as retail inflation for industrial workers eased to 6.16 per cent in June from 6.97 per cent in May this year due to lower prices of certain food items and petrol. Some support will come as the government data showed that the output of eight core infrastructure sectors expanded by 12.7 per cent in June against 9.4 per cent in the year-ago period. However, some cautiousness may come as RBI data showed that India’s foreign exchange reserves declined $1.152 billion to $571.56 billion for the week ended July 22. The reserves has been declining amid continuing volatility in the rupee which has also significantly depreciated against the US dollar. Traders may take note of data from the Controller General of Accounts (CGA) showing that the central government's fiscal deficit touched 21.2 per cent of the annual target in the June quarter as against 18.2 per cent in the year-ago period. In actual terms, the fiscal deficit was at Rs 3.51 trillion at the end of the first quarter of 2022-23. Market participants will be eyeing the manufacturing PMI data to be out later in the day for further cues. This week will be crucial as investors await the Reserve Bank of India’s MPC policy decision on Friday. The bi-monthly meet of policymakers is scheduled to start on August 3 and end on August 5. There is expectation that the RBI may go in for its third consecutive policy rate hike by 25-35 basis points to check high retail inflation. There will be some buzz in pharma stocks as Udaya Bhaskar, Director General of Pharmaceuticals Export Promotion Council of India (Pharmexcil), a body under the Department of Commerce said Indian pharma exports registered a growth of eight per cent during the first quarter of the current financial year to $6.26 billion. Sugar industry stocks will be in focus with a private report that the Centre is likely to allow an additional 1.2 million tonnes (MT) of sugar exports in the current season ending September 2022 taking into account higher-than-anticipated domestic production. This additional quota would be over and above 10 MT of sugar exports allowed for the current 2021-22 season. There will be some reaction in stocks related to infrastructure industry as the Ministry of Statistics and Programme Implementation in its latest report stated that as many as 384 infrastructure projects, each entailing an investment of Rs 150 crore or more, have been hit by cost overruns of more than Rs 4.66 lakh crore. Investors awaited more of corporate earnings from India Inc for domestic cues, with ITC due to post its quarterly numbers later in the day.

The US markets ended higher on Friday after investors discarded recession fears. Asian markets are trading mixed on Monday as disappointing Chinese economic data fed doubts last week's rally on Wall Street.

Back home, Indian equity benchmarks extended their winning run to a third day and settled with gains of over a percent on Friday following buying in index majors Tata Steel, Sun Pharma and Bajaj Finserv. Key indices made gap-up opening, as traders took encouragement with the commerce ministry stating that the manufacturing sector attracted foreign direct investments worth $21.34 billion in 2021-22, an increase of 76 per cent year-on-year. Traders took some support with RBI data showing that Bank credit rose by 12.89 per cent to Rs 122.81 lakh crore and deposits by 8.35 per cent to Rs 168.09 lakh crore in the fortnight ended July 15, 2022. Besides, exchange data showed foreign institutional investors (FIIs) became net buyers in the capital markets as they bought shares worth Rs 1,637.69 crore on Thursday. However, markets erased some of the intraday gains in morning deals amid a mixed trend in the global equity markets. But, indices gained traction in final minutes of trade to close around the day’s high as sentiments got up-beat with Minister of State in the Ministry of Commerce and Industry Som Parkash’s statement that India has received its highest ever FDI inflow of Rs 6,31,050 crores in Financial Year 2021-22. Further, FDI Equity inflow in Manufacturing sectors has increased to Rs 1,58,332 crore in Financial Year 2021-22 from Rs 89,766 crore (FY 2020-21), which is an increase of 76%. Traders took note of Power Minister R K Singh’s statement that power deficit came down from 2 per cent in April to 0.4 per cent in May and 0.6 per cent in June despite significant rise in demand of electricity. Finally, the BSE Sensex rose 712.46 points or 1.25% to 57,570.25 and the CNX Nifty was up by 228.65 points or 1.35% to 17,158.25. 

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