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Extending previous session’s northward journey, Indian equity benchmarks ended at their fresh record closing levels on Friday. Both the S&P BSE Sensex and the NSE Nifty 50 settled above crucial 55,400 and 16,500 levels, respectively. Markets made gap-up opening and continued to move higher, on the back of promising inflation and industrial production data. Retail inflation eased to a three-month low of 5.59 per cent in July, mainly due to softening food prices, after holding above 6% for two months in a row. The Consumer Price Index (CPI) based inflation was 6.26 per cent in June and 6.73 per cent in July 2020. Besides, Industrial production surged by 13.6 per cent in June mainly due to a low-base effect and good performance by manufacturing, mining and power sectors but the output remained below the pre-pandemic level. In June 2021, the IIP stood at 122.6 points compared to 107.9 point in the same month last year. Sentiments on the street also remained optimistic with Finance Minister Nirmala Sitharaman’s statement that the government is an active participant in the recovery process and remains committed to reforms as is evident from a series of tangible steps taken including the passing of seven critical bills related to finance and corporate affairs in the monsoon session of parliament, commitment towards disinvestment and privatization and using technology to improve tax buoyancy.

Markets extended rally in second half of trade to settle near intraday highs, as Commerce and Industry Minister Piyush Goyal assured the industry that the government will protect its interests in free trade agreements (FTAs) and these pacts would be finalised after holding detailed discussions with all the stakeholders. The market sentiment also received a boost after National Statistical Office (NSO) reported that manufacturing sector, which constitutes 77.63 per cent of the Index of Industrial Production (IIP), grew by 13 per cent in June this year due to a low-base effect and good performance by manufacturing, mining and power sectors but the output remained below the pre-pandemic level. Besides, recognising the role of innovations to strengthen India's response to COVID-19 crisis and preparedness for emerging healthcare needs, the National Health Authority has signed an MoU with the Indian Institute of Technology Delhi. 

On the global front, Asian markets ended mostly lower on Friday as traders remain concerned over the recent regulatory crackdown in China and the alarming spread of the highly contagious coronavirus variants in the region, which will impact the pace of the global economy recovery from the pandemic. European markets were trading higher amid optimism over a strong earnings season and signs that U.S. inflation may have peaked. Back home, on the sectoral front, sugar industry stocks were in focus as trade body AISTA said sugar mills have exported 5.11 million tonnes of the sweetener so far in the ongoing 2020-21 marketing year ending September, with maximum shipments to Indonesia. Auto industry’s stocks also were in action as Society of Indian Automobile Manufacturers (SIAM) has said Passenger vehicle wholesales in India increased by 45 per cent to 2,64,442 units in July against 1,82,779 units in the same month last year. There was some buzz in aviation stocks as the civil aviation ministry hiked the maximum and minimum limit on domestic airfares by 12.5 percent. The government has also allowed domestic airlines to deploy more capacity as the demand in the domestic market has started improving owing to better consumer sentiment. 

Finally, the BSE Sensex rose 593.31 points or 1.08% to 55,437.29, while the CNX Nifty was up by 164.70 points or 1.01% to 16,529.10.    

The BSE Sensex touched high and low of 55,487.79 and 54,905.49, respectively and there were 20 stocks advancing against 10 stocks declining on the index.  

The broader indices ended in red; the BSE Mid cap index fell 0.06%, while Small cap index was down by 0.01%.

The top gaining sectoral indices on the BSE were Telecom up by 1.80%, TECK up by 1.64%, Capital Goods up by 1.58%, IT up by 1.54% and Energy up by 1.31%, while Realty down by 0.79%, Healthcare down by 0.76%, Utilities down by 0.45% and PSU down by 0.13% were the top losing indices on BSE.

The top gainers on the Sensex were TCS up by 3.22%, Larsen & Toubro up by 2.78%, Bharti Airtel up by 2.21%, HCL Technologies up by 2.06% and Tata Steel up by 1.83%. On the flip side, Power Grid Corporation down by 1.28%, Dr. Reddy's Lab down by 1.21%, Indusind Bank down by 1.09%, Bajaj Finance down by 0.74% and NTPC down by 0.63% were the top losers.

Meanwhile, expressing the government's commitment to continue with reforms, Finance Minister Nirmala Sitharaman has assured India Inc that the government is committed in doing everything that it requires to be done for the economic growth hit by the COVID-19 pandemic. Stressing that there is a need to promote growth as it helps bring down poverty, she however said it would not be at the cost of inflation. RBI has been mandated to keep inflation at 4 per cent, with tolerance level of 2 per cent on either side.

The minister said ‘growth will be given its importance. Growth will be pushed both by the Reserve Bank and by us. We also want to assure the industry that inflation in the last 7 years has not crossed 6 per cent except seasonal variation. Inflation has been well within that band which is before us.’ Pointing out that she is not looking at growth versus inflation, Sitharaman said ‘we should attend to inflation, keep it contained, take all the necessary steps, but never forget that growth is what is going to make the difference to the economy's revival and growth is what is eventually going to remove poverty and bring in a certain level playing field for all the Indian citizens.’ She further said the government is looking at being an active participant in the economic recovery.

Observing that some high frequency indicators are pointing towards economic revival after unlock measures announced by many states with decline in COVID-19 cases, she said foreign direct investment (FDI) has been flowing into India non-stop despite the pandemic because there was confidence about the macroeconomic fundamentals.

The CNX Nifty traded in a range of 16,543.60 and 16,376.30 and there were 30 stocks advancing against 20 stocks declining on the index.   

The top gainers on Nifty were Tata Consumer Product up by 4.00%, TCS up by 3.11%, Larsen & Toubro up by 2.56%, HCL Technologies up by 2.50% and Tata Steel up by 2.22%. On the flip side, Eicher Motors down by 2.73%, Dr. Reddy's Lab down by 1.57%, Power Grid Corporation down by 1.26%, Cipla down by 1.20% and Britannia Industries down by 1.10% were the top losers.

European markets were trading higher; UK’s FTSE 100 increased 28.26 points or 0.39% to 7,221.49, France’s CAC increased 21.29 points or 0.31% to 6,903.76 and Germany’s DAX increased 63.64 points or 0.4% to 16,001.15.

Asian markets ended mostly lower on Friday amid concerns over spread of the delta variant corona-virus globally. Japan’s capital, Tokyo's virus advisory board described the infection situation in the city as uncontrollable. Chinese shares settled lower as Chinese semiconductor stocks fell after sharp gains, while the Chinese government has unveiled a five-year and 10-point plan outlining tighter regulation of its economy. Also, China partially shut down the world’s third-busiest container port after a worker was infected with Covid-19, that threatened to severely disrupt global commerce. Hong Kong shares ended down after the Shanghai Stock Exchange said it would remove top chipmaker SMIC from an index of eligible Shanghai stocks under the Shanghai-Hong Kong Stock Connect.

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