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Indian markets recovered from an early slide and ended higher on Monday, with IT and metal stocks leading the surge. Today, markets are likely to get optimistic start tracking firm global cues. Market participants will be eyeing Manufacturing PMI data to be out later in the day for more cues. Sentiments will get a boost as core sector output growth hitting a five-month high in June due to a high base effect and positive growth in seven of the eight sectors. Some support will come with a private report that the pace of credit offtake continued to be robust in June 2023, with sectors clocking year-on year (YoY) growth of between 8.1 per cent and 26.7 per cent. Traders may take note of report that India is expected to receive normal rainfall in the August-September period after excess precipitation in July. However, traders may be concerned amid foreign fund outflows. According to the provisional data available on the NSE, foreign institutional investors (FII) sold shares worth net Rs 701.17 crore on July 31. Meanwhile, the government data showed that the Centre’s fiscal deficit at the end of the first quarter touched 25.3 per cent of the full-year target. According to the data released by the Controller General of Accounts (CGA), in absolute terms, the fiscal deficit - the gap between expenditure and revenue - was Rs 4,51,370 crore as of end-June. Oil & gas sector stocks will be in focus as the Indian government hiked windfall tax on petroleum crude to Rs 4,250 ($51.68) per tonne from Rs 1,600 with effect from August 1. A windfall tax on diesel has been increased to Rs 1 per litre from nil earlier. There will be some reaction in IT stocks as the government extended the deadline to apply for benefits under the production-linked incentive scheme for IT hardware products such as laptops, tablets, all-in-one PCs, servers, and edge computing devices till August 30. Meanwhile, the April-June quarter (Q1FY24) will continued to be tracked by investors. Companies like Inox-PVR, KPR Mills, Adani Total Gas, and Escorts Kubota are some of the prominent names to report Q1 scorecard on August 1.

The US markets ended higher on Monday despite data showed Chicago-area business activity contracted at a slightly slower rate in July. Asian markets are trading mostly in green on Tuesday after China's top economic planning agency outlined details to stimulate consumer spending and reports suggested that Beijing and Shenzhen may ease curbs on the property sector.

Back home, after two days of pause, Indian equity benchmarks resumed their uptrend and gained over half a percent on Monday, following the global market trend, as cooling inflation across the globe gave hopes of an end to the policy tightening era. Domestic equities started the week on a tepid note amid foreign fund outflows. Provisional data from the National Stock Exchange (NSE) showed that foreign institutional investors (FII) sold shares worth Rs 1,023.91 crore on July 28. Some concern also came as Reserve Bank of India's data showed India's foreign exchange reserves saw a dip of $1.9 billion, dragging the reserves to $607.03 billion for the week ending on July 21. However, key gauges soon turned positive as traders took encouragement with Finance minister Nirmala Sitharaman’s statement that the government is focusing on four I’s - infrastructure, investment, innovation and inclusivity to put in place an enabling ecosystem that will catapult India into the league of developed nations by 2047. Markets extended gains in second half of trading session, taking support from Commerce and Industry Minister Piyush Goyal’s statement that he is hopeful of India finalising certain free trade agreements (FTAs) in the next few months, which would help promote exports. India is in the final stages of concluding FTA negotiations with the UK. The country is also negotiating similar pacts with Canada and European Union (EU). Some optimism also came with a private report that the country’s per capita income is likely to grow by close to 70 per cent to $4,000 by fiscal 2030 from $2,450 in fiscal 2023, helping it become a middle-income economy with $6-trillion GDP, more than half of which will be coming in from household consumption. Traders took a note of the income tax department’s statement that over 5 crore income tax returns (ITRs) have been filed for the 2022-23 fiscal, which ended March 31. Out of the 5.03 crore ITRs filed till July 27, 2023, about 4.46 crore ITRs have been e-verified i.e. more than 88 per cent ITRs filed have been e-verified. Finally, the BSE Sensex rose 367.47 points or 0.56% to 66,527.67 and the CNX Nifty was up by 107.75 points or 0.55% to 19,753.80.

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