Friday turned out to be a fabulous day of trade for Indian equity benchmarks with frontline gauges recapturing their crucial 11,500 (Nifty) and 38,000 (Sensex) levels, as traders gave thumbs up to the strong macro-economic data. Sentiments remained up-beat since beginning with key gauges making gap-up opening with retail inflation of India cooling to an 10-month low of 3.69% in August mainly due to a fall in prices of kitchen items, including fruits and vegetables, while industrial production grew at 6.6% in July, slightly faster than the expected 6.5% expansion, on the back of good performance by the manufacturing sector and higher offtake of capital goods and consumer durables. Some support also came with a private report that private equity (PE) and venture capital (VC) investments stood at $1.6 billion across 50 deals in August, with buyout deals recording two times increase in value compared to the year-ago period. Traders also took note of a report that the government is determined to keep fiscal deficit within the budgeted level of 3.3% of GDP as the country cannot afford to have a twin deficit problem. Markets extended their gains in second half of the session, as India's Wholesale price index (WPI) inflation eased for the second straight month in August 2018, supported by declining minerals prices. According to the latest data released by the government, WPI slowed down to 4.53% in August from 5.09% in July and 3.24% during the corresponding month of the previous year. Traders also took note of the prime minister's economic advisory panel member's statement that India needs to be extremely vigilant to check weakness in the rupee and the task was to minimise volatility and avoid contagion to other macro policies. Meanwhile, the government has notified October 1 as the date for implementing the tax deducted at source (TDS) and tax collected at source (TCS) provisions under GST law. As per the Central GST (CGST) Act, the notified entities are required to collect TDS at 1% on payments to goods or services suppliers in excess of Rs 2.5 lakh. Also, states will levy 1% TDS under state laws. Finally, the BSE Sensex surged 372.68 points or 0.99% to 38,090.64, while the CNX Nifty was up by 145.30 points or 1.28% to 11,515.20.

The US markets ended mostly higher with marginal gains on Friday. Traders remained cautious following a report that President Donald Trump still wants to impose tariffs on China despite recent suggestions that tensions between Washington and Beijing were easing. As per a private report, Trump instructed his team to proceed with tariffs on about $200 billion more in Chinese products, despite Treasury Secretary Steven Mnuchin's recent attempts to restart talks with Chinese officials. Separately, Hurricane Florence was making landfall on the coastline of the Carolinas Friday. According to CoreLogic estimates, wind and storm surges from the hurricane were estimated to cause property losses between $3 billion and $5 billion. The slow-moving storm was downgraded to a Category 1 storm, but still with forecasts for catastrophic floodwaters. On the economic front, US retailers posted the weakest sales in August in six months, as only an increase in purchases at gas stations prevented an outright decline. However, the soft patch in spending is seen as unlikely to last. Retail sales rose a scant 0.1% in August. Street had forecast a 0.3% increase. Dow Jones Industrial Average gained 8.68 points or 0.03 percent to 26,154.67, the S&P 500 advanced 0.80 points or 0.03 percent to 2,904.98, while Nasdaq was down by 3.67 points or 0.05 percent to 8,010.04.

Crude oil futures ended marginally higher on Friday, as the US reportedly increased pressure on countries to comply with upcoming sanctions on Iranian oil. Traders also continued to watch for any impact on the energy market from Hurricane Florence. Besides, gains in crude oil prices were modest as traders were weighing the likely impact of US-China trade dispute on oil demand. Meanwhile, the monitoring committee set up by OPEC and non-OPEC producers is scheduled to meet in Algiers on September 23 to discuss a new production strategy. Benchmark crude oil futures for October increased 40 cents or 0.6 percent to settle at $68.99 a barrel on the New York Mercantile Exchange. November Brent crude declined 9 cents or 0.1% to settle at $78.09 a barrel on London's Intercontinental Exchanged.

Extending its gaining streak for second straight day, Indian rupee ended significantly higher against dollar on Friday, amid reports that the government may announce steps to prop up the domestic unit. Traders took encouragement with retail inflation of India cooling to an 10-month low of 3.69% in August mainly due to a fall in prices of kitchen items, including fruits and vegetables, while industrial production grew at 6.6% in July, slightly faster than the expected 6.5% expansion, on the back of good performance by the manufacturing sector and higher offtake of capital goods and consumer durables. Adding to the optimism, India's Wholesale price index (WPI) inflation eased for the second straight month in August 2018, supported by declining minerals prices. Finally, the rupee ended at 71.86, 32 paise stronger from its previous close of 72.18 on Wednesday.

The FIIs as per Friday's data were net sellers in equity segment, while they were net buyers in debt segment. In equity segment, the gross buying was of Rs 4256.08 crore against gross selling of Rs 5332.98 crore, while in the debt segment, the gross purchase was of Rs 1616.41 crore with gross sales of Rs 1212.18 crore. Besides, in the hybrid segment, the gross buying was of Rs 0.26 crore against gross selling of Rs 0.14 crore.

The US markets ended tad higher on Friday, with worries about higher interest rates and the US-China trade fight weighing on sentiment. President Trump instructed aides to proceed with tariffs on about $200 billion in Chinese products, despite Treasury Secretary Steven Mnuchin's attempts to restart talks with Beijing. Asian markets were trading mostly in negative territory on Monday, amid reports over the weekend that the US could be imposing new tariffs on $200 billion of Chinese goods as early as this week. Continuing recovery for the second straight day, the Indian markets ended the Friday's session with notable gains as better-than-expected macro data and further recovery in the rupee supported the sentiments. Today, the start of holiday truncated week is likely to be in negative terrain following weak regional cues amid trade war concerns. On the domestic front, traders will be concerned about report that foreign exchange reserves fell below $400 billion, for the first time since November 11, 2017, in the first week of September. As on September 7, foreign exchange reserves stood at $399.28 billion, a result of the Reserve Bank of India's intervention at a time when portfolio flows were witnessing some reversals. Also, there will be some cautiousness with ICRA's report that funding of farm loan waivers, poll-related spending and other populist measures are likely to ensure that states are set to miss their fiscal consolidation targets budgeted at the beginning of the year. However, traders may get some encouragement later in the day with the commerce ministry's data showing that India's exports rose at the fastest pace in three months to reach $27.84 billion in August on account of healthy growth in petroleum products, engineering, pharma, and gems and jewellery shipments. Besides, trade deficit during the month narrowed to $17.4 billion as against $12.72 billion in the same month last year. In July, the trade deficit soared to a near five-year high of $18.02 billion. Traders may take note of a report that the government on Friday announced an array of steps, including removal of withholding tax on Masala bonds, relaxation for FPIs, and curbs on non-essential imports, to contain the widening CAD and check the rupee fall. There will be some buzz in steel sector stocks with report that the decision to impose steep tariffs by the US on steel and aluminium may impact the domestic metal sector. Separately, steel minister Chaudhary Birender Singh said negotiations are under way with the US over the 25% tariff it had imposed on steel imports.

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

Nifty Top volumes

• HCL Technologies and US-based State Street Corporation's JV -- HCL SSHS has opened its state of the art IT Centre in Andhra Pradesh. 
• NTPC will commence commercial operation of Unit 3 of 800 MW of Kudgi Super Thermal Project, Stage-I with effect from September 15, 2018.
• Maruti Suzuki India has increased production of its blockbuster model Baleno, with a core focus to enhance customer experience. 
• M&M is aiming to become a carbon neutral company by 2040 with focus on energy efficiency and usage of renewable power.