Benchmarks to make optimistic start of new week

Indian markets gave up early gains and ended lower on Friday, with rate-sensitive bank, auto and financial services firms declining after data showed India's retail inflation inched close to the 7% mark in July. Today, the start of new week is likely to be optimistic following positive cues from Asian peers. Some support will come in with report that foreign portfolio investors (FPI) remained net investors in Indian markets in the first half of August, pumping in Rs 28,203 crore in debt and equities on net basis in the period. Traders may take note of president of CII’s statement that PM’s address was an address of confidence in COVID times combined with aspiration & hope. India has to understand the global trend, which is instead of multilateralism to bilateralism. Move away from multilateralism because that is out of fashion as I see it. Besides, the Reserve Bank of India’s (RBI’s) data showed that the country's foreign exchange reserves swelled by $3.623 billion to a record high of $538.191 billion in the week ended August 7. However, rising coronavirus cases may impact the market sentiments. India has recorded over 58,108 coronavirus cases in the past 24 hours, taking its total to 2,647,316. With over 961 fatalities reported on Sunday, the country's death toll has surged to 51,045. Some cautiousness may be there in the markets as the government data showed that contracting for the fifth straight month, India's exports slipped 10.21 per cent to USD 23.64 billion in July, on account of decline in the shipments of petroleum, leather and gems and jewellery items. Telecom stocks will be in limelight as the Supreme Court will again hear the AGR case today. In last week's hearing, the Supreme Court had directed telecom companies under insolvency to submit details of spectrum sharing agreements that they have entered into. Banking stocks will be in focus with latest data from the RBI showing that bank credit and deposits grew 5.51 per cent and 11.11 per cent to Rs 102.65 trillion and Rs 141.61 trillion, respectively, in the fortnight ended July 31. There will be some reaction in agriculture related stocks with report that as the sowing of kharif crops enters its last leg, acreage this year has been almost 8.54% more than last year as of August 14.

The US markets closed mostly lower on Friday after a weaker-than-expected rise in retail sales underlined lingering questions about the economy’s resilience following its pandemic-induced collapse in the spring. Asian markets are trading mostly in green on Monday as investors waited to see if the recent sell-off in longer-dated US.

Back home, Indian equity benchmarks traded with a positive bias for most part of the day but selling activity which took place during late hour of trade mainly forced the markets to cut all of their gains and ended Friday’s session with losses of over a percent each, amid selling in Auto, Banking and Finance counters. The benchmarks opened higher and were trading in a narrow range, as traders took some support with the Union Health Ministry’s statement that the Covid-19 recovery rate has risen to 70.77 per cent on August 13 with the total number of patients recuperating from the disease reaching nearly 1.7 million, while the case fatality rate has further declined to 1.96 per cent. Sentiments remained positive with Finance Minister Nirmala Sitharaman’s statement that the faceless tax scrutiny assessment and appeal system would help ease compliance burden of taxpayers and increase fairness and objectivity in the tax system. However, key indices wiped off morning gains and fell sharply in the late afternoon session, amid cooling off buying interest across sectors. Some cautiousness also came in with the data released by the National Statistics Office (NSO) showing that India's retail inflation as measured by the Consumer Price Index (CPI) increased to 6.93 percent in the month of July as food prices continued to soar due to disrupted supply chains. Though, markets managed to trim some losses in final minutes of trading, taking support from data showing that the wholesale price-based inflation declined 0.58 per cent in July, even as food items turned costlier. WPI inflation in June was at (-) 1.81 per cent, while for the month of May and April it was (-) 3.37 per cent and (-) 1.57 per cent respectively. However, fuel and power basket inflation fell 9.84 per cent in July, compared to 13.60 per cent in the previous month. Manufactured products, however, witnessed inflation of 0.51 per cent in July, as against 0.08 per cent in June. Finally, the BSE Sensex fell 433.15 points or 1.13% to 37,877.34, while the CNX Nifty was down by 122.05 points or 1.08% to 11,178.40.