Indian equity markets extended their southward journey for second straight session on Friday, as both the larger peers -- Sensex and Nifty closed with the losses of around 1.50% each. Key indices made a slightly positive start of the day, aided with Finance Minister Nirmala Sitharaman's statement that the tax proposals in the Finance Bill 2019 are aimed at improving the ease of living and reducing pain of the citizens. Nirmala Sitharaman also said that budget proposals will promote Make in India and digital payment. Adding some relief, NITI Aayog Vice Chairman Rajiv Kumar said that the focus of the second term of the Narendra Modi government is accelerated economic growth led by the private sector and private enterprise. But, markets soon lost all of their gains to remain negative for the whole day, after the International Monetary Fund's (IMF) report showed that India's current account (CA) balance deficit grew to $68 billion in 2018-19 from $49 billion the previous year, and it said the deficit was justified by development needs. Market participants remained cautious, as sticking to his analysis that India's economic growth has been overestimated, Arvind Subramanian said he had raised doubts about the GDP numbers in 2015 when he was the chief economic adviser of the Modi government as he found inconsistency between projected growth and other macro indicators. Finally, the BSE Sensex lost 560.45 points or 1.44% to 38,337.01, while the CNX Nifty was down by 177.65 points or 1.53% to 11,419.25.

The US markets failed to maintain early gains and ended in red on Friday following a report that Federal Reserve officials would cut interest rates by a quarter percentage point rate cut at the end of the month, rather than a half-point move, and after Iran said it seized a British-flagged oil tanker in the Strait of Hormuz. The initial strength in Wall Street partly reflected a positive reaction to upbeat earnings news from Microsoft (MSFT), as the software giant reported fiscal fourth quarter results that exceeded street estimates on both the top and bottom lines. However, some cautiousness prevailed in the markets after The Wall Street Journal (paywall) reported that Fed officials, based on recent public statements and interviews, signaled they were ready to cut rates by a quarter-percentage point at their July 30-31 meeting, but weren't prepared to make a half-point reduction. Besides, Iran said it seized oil vessels in the Strait of Hormuz, heightening tensions in the region a day after President Donald Trump said a U.S. Naval ship shot down an Iranian drone. On the economic front, the University of Michigan released a report showing a slight improvement in US consumer sentiment in the month of July. The preliminary report showed the consumer sentiment index inched up to 98.4 in July from the final June reading of 98.2. Street had expected the index to edge up to 98.5. Meanwhile, traders are looking ahead to the on reports on new and existing home sales, durable goods orders and second quarter Gross Domestic Product (GDP) in the next week. Dow Jones Industrial Average slipped 68.77 points or 0.25 percent to 27154.20, Nasdaq declined 60.75 points or 0.74 percent to 8146.49 and S&P 500 was down by 18.50 points or 0.62 percent to 2976.61.

Crude oil futures settled marginally higher on Friday amid rising tensions in the Middle East after the US Navy shot down an Iranian drone in the Strait of Hormuz. The US President Donald Trump told that the USS Boxer took defensive action after the Iranian drone moved close to within 1,000 yards of the amphibious assault ship and ignored multiple calls to stand down. Besides, report that the Iranian Revolutionary Guard has seized a U.K.-flagged oil tanker in the Gulf of Oman also supported oil prices. Meanwhile, the International Energy Agency has reduced its 2019 oil demand forecast to 1.1 million barrels per day (bpd). Benchmark crude oil futures for August gained 33 cents or 0.6 percent to settle at $55.63 a barrel on the New York Mercantile Exchange. September Brent rose 54 cents or 0.9 percent to settle at $62.47 a barrel on London's Intercontinental Exchange.

Snapping three day losing streak, Indian rupee staged a recovery against dollar on Friday, following dollar selling from banks and exporters. Sentiments turned optimistic with NITI Aayog Vice Chairman Rajiv Kumar's statement that the focus of the second term of the Narendra Modi government is accelerated economic growth led by the private sector and private enterprise. He asserted that India will be at the cusp of a major transformation over the next five years. However, heavy losses in the domestic equity market along with dollar's strength against major global currencies overseas restricted the local unit's further up move. On the global front, euro fell against a rebounding US dollar on Friday, as investors ramped up bets for a European Central Bank interest rate cut as early as next week. Finally, the rupee ended at 68.80, 17 paise stronger from its previous close of 68.97 on Thursday.

The FIIs as per Friday's data were net sellers in both equity and debt segments. In equity segment, the gross buying was of Rs 4118.07 crore against gross selling of Rs 5519.61 crore, while in the debt segment, the gross purchase was of Rs 2114.63 crore with gross sales of Rs 3129.43 crore. Besides, in the hybrid segment, the gross buying was of Rs 2.16 crore against gross selling of Rs 1.45 crore.

The US markets ended lower on Friday as geopolitical worries overshadowed the hopes of interest rate cuts by the Federal Reserve. Asian markets are trading mostly in red on Monday as investors reduced expectations of an aggressive interest rate cut by the Federal Reserve, while heightened Middle East tensions following an Iranian seizure of a British tanker lifted crude oil prices. Indian markets went through a disappointing day of trade on Friday, with benchmark indices losing over a per cent each on account of heavy selloff by the FIIs amid disappointing earnings and reports of slowing economic growth. Today, the markets are likely to make slightly negative start of the new week, amid weakness in Asian peers. There will be some cautiousness with the Reserve Bank of India's (RBI) data showing that after touching record highs, the foreign exchange reserves declined by $1.113 billion to $428.797 billion in the week to July 12 - the first fall after four consecutive weeks of gains - due to a fall in foreign currency assets. However, some respite may come later in the day as Asian Development Bank (ADB) lowered the inflation forecast for India during the current financial year by 0.2 percentage points to 4.1 percent, on the back of gain in rupee and cut in the country's GDP projection. Traders may take note of the Confederation of Indian Industry's (CII) statement that India needs to speedily boost a variety of exports ranging from women's apparel, drugs and furniture to cyclic hydrocarbons, at a time when global trade growth continues to shrink. Meanwhile, SEBI has tweaked the formats for limited review and audit report of listed entities in order to align them with the revised auditing standards. This will also be applicable to entities whose accounts are to be consolidated with the listed entity. There will be some buzz in the Auto stocks as the Goods and Services Tax (GST) Council, chaired by Finance Minister Nirmala Sitharaman, will meet on July 25 and decide on lowering tax rates for electric vehicles. GST rate for petrol and diesel cars and hybrid vehicles is already at the highest bracket of 28 per cent plus cess. There will be some reaction in banking stocks as Reserve Bank of India Governor Shaktikanta Das asked state-owned banks to follow the new framework for resolution of stressed assets as well as to speed up the recovery process. Also, there will some buzz in aviation stocks with the monthly data from regulator DGCA showing that domestic air passenger traffic rose 6.19 percent in June over the year-ago period, with local carriers flying 12.02 million passengers in the month. There will be lots of earnings reaction based on the performance of the companies, to keep the markets in action.

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

Nifty Top volumes

• Infosys' subsidiary -- EdgeVerve Systems has launched AssistEdge Cloud RPA to help enterprises futureproof their businesses with greater speed, scalability and security. 
• Tata Motors has incorporated a wholly owned subsidiary company named Brabo Robotics and Automation with effect from July 17, 2019. 
• Reliance Industries' telecom arm -- Jio has added 81,80,348 customers in May 2019. 
• Bajaj Finance has raised funds worth Rs 1,500 crore through allotment of 15,000 Secured Redeemable NCDs of face value of Rs 10 lakh on Private Placement basis.