Indian stock market ended on a positive note as investors remained optimistic on hopes of further rate cuts by the central bank after data showed that inflation based on consumer price index dipped to 13-month low in September. Data released by the statistics office showed consumer inflation at 4.31% in September compared with 5.05% in August and 6.07% in July. The decline was due to a steep drop in food inflation to 3.88% in September from 5.91% in August. The data raises hopes of more rate cuts as the outlook for inflation is benign for about six months and there's good chance consumer inflation will stay below RBI's 5% target for March 2017. Adding to the confidence among market participants, India's Wholesale Price Index (WPI) in the month of September 2016 also softened to 3.57 percent compared to 3.74 per cent in the previous month. Besides, firm global cues coupled with the appreciation in rupee value against the dollar added to the optimistic sentiments. Meanwhile, result session of Q2FY17 has started on mixed note as TCS reported better than expected profit, but its revenue growth remained a drag, while Infosys posted strong set of number, but cut its financial-year revenue growth target for the second time in three months on an uncertain business outlook. Banking stocks edged higher after the central bank allowed banks to classify government securities borrowed from the central bank in the daily liquidity adjustment facility (LAF) under the statutory liquidity ratio (SLR), making liquidity management for banks easier, while Cement stocks surged on the report that cement demand in the country is expected to touch 8 per cent in financial year (FY) 2017-18, helped by government's push to the infrastructure sector. Finally, the BSE Sensex gained by 30.49 points or 0.11% to 27673.60, while the CNX Nifty rose 10.05  points or 0.12% to 8,583.40. 

The US markets closed higher on Friday, on Federal Reserve Chairwoman Janet Yellen comments that there may be benefits to running the economy with a tight labor market and after a trio of quarterly bank results which topped estimates. Yellen stated that it might be wise to run a high pressure economy, one with a tight labor market, to reverse the negative effects of the Great Recession. Though not addressing interest rates or immediate policy concerns directly, Yellen laid out the deepening concern at the Fed that US economic potential is slipping and aggressive steps may be needed to rebuild it. Looking for policies that would lower unemployment further and boost consumption, even at the risk of higher inflation, could convince businesses to invest, improve confidence, and bring even more workers into the economy. From low inflation to the effect of low interest rates on spending, Yellen's remarks demonstrated how little is the economy been acting as the Fed expected. On the economy front, sales at US retail stores rebounded in September, with auto dealers and gas stations racking up the biggest gains, in a sign that consumers are still spending enough to keep the economy on a slow but steady growth path. The Dow Jones Industrial Average added 39.44 points or 0.22 percent to 18,138.38, Nasdaq gained 0.83 points or 0.02 percent to 5,214.16, while S&P 500 was up 0.43 points or 0.02 percent to 2,132.98. 

Crude oil futures ended lower on Friday, as data showed U.S. rig counts continue to rise. Baker Hughes reported that the number of active US oil rigs rose by four to a total of 432 in the latest week. The US rig count has now risen in 15 of the last 16 weeks. Prices were also under pressure with Russia's draft budget suggesting that the world's second-largest oil producer was planning for low oil prices for the next three years. Traders overlooked some positive economic news, the Commerce Department said retail sales climbed by 0.6 percent in September after edging down by a revised 0.2 percent in August, while US producer prices increased by slightly more than expected in the month of September. Benchmark crude oil futures for November delivery was down $0.12 or 0.2 percent to $50.32 on the New York Mercantile Exchange. In London, Brent crude for December delivery ended at $51.95, lower by $0.08 or 0.2 percent on the ICE.

Indian rupee appreciated against US dollar on account of fresh selling of the American currency by banks and exporters. Domestic currency got some support after data showed that India's Wholesale Price Index (WPI) in the month of September 2016 has softened to 3.57 percent as compared to 3.74 percent in the previous month. Also, firm domestic equity market supported the rupee, but the dollar strengthened against some currencies overseas capped the gains. On the global front, dollar rose against yen on Friday, as investors await U.S. retail sales data and remarks from Federal Reserve officials that could cement expectations of a U.S. interest rate hike this year. Finally, the rupee ended at 66.71, 23 paise stronger from its previous close of 66.94 on Thursday.

The FIIs as per Friday's data were net sellers in equity and debt segments both. In equity segment, the gross buying was of Rs 6286.00 crore against gross sell of Rs 7132.00 crore, while in the debt segment, the gross purchase was of Rs 1560.73 crore with gross sales of Rs 3440.82 crore. 

The US markets made a modestly positive close in last session, but failed to sustain the early rally mood on remarks by Federal Reserve Chair Janet Yellen at a Boston Fed conference. The Asian market have made mostly a lower start, as the dollar strengthened after Federal Reserve Chair Janet Yellen hinted that the U.S. economy may be allowed to run hot.  The Indian markets managed to end the final day of the last week on a positive note, on hopes of another rate cut after decline in inflation. Today, the start of the new week is likely to be cautious tailing the weakness in regional markets, though there is not much on the economic front traders will be eyeing the earnings of important companies to get cues. Markets may get some support in latter trade with Prime Minister Narendra Modi's assertion that results of the reforms undertaken by his government were visible and the country has transformed into 'one of the most open economies' in the world with a strong growth rate. Meanwhile Prime Minister has urged BRICS business to work with members to boost trade and said that we count on the BRICS Business Council to work with us to achieve our common aim of strengthening mutual trade, enhancing business opportunities, building investments linkages, promoting innovation and removing bottlenecks to intra-BRICS commerce. There will be some buzz in the banking sector on report from the Reserve Bank of India (RBI) that Indian banks' loans rose 10.4 percent in two weeks to September 30 from a year earlier. The PSU oil marketing companies will be in action as petrol price has been hiked by Rs 1.34 a litre, the fifth increase in two months, and diesel by Rs 2.37 a litre on back of spike in global rates. There will be some important earnings announcements, DHFL, Orient Paper, UltraTech Cements, Zensar Technologies etc will report their numbers.

Support and Resistance: NSE (Nifty) and BSE (Sensex)

Nifty Top volumes

• Bharti Airtel has unveiled its V-Fiber technology, offering super fast internet services.
• BPCL plans to spend $6.75 billion through 2022 to raise refining capacity by 62% in order to meet rising fuel demand in the world's fastest growing major economy.
• Wipro has launched Treasury DNA Decisions and Analytics platform that will digitally enable global treasuries using cloud technologies.
• HDFC is all set to rise up to Rs 500 crore through rupee-denominated bonds from overseas investors.
• Infosys has reported 7.02% rise in its net profit at Rs 3476 crore for the quarter under review as compared to Rs 3248 crore for the same quarter in the previous year.