Snapping five days losing streak, Indian equity benchmarks showed splendid recovery on Monday with frontline gauges garnering gains of three fourth of a percent, as traders opted to buy beaten down but fundamentally strong stocks. After a gap-up opening markets traded with traction through the session and reclaimed their crucial 9,800 (Nifty) and 31,500 (Sensex) levels, though marginal sell off in dying hour of trade pulled key indices below those levels. Sentiments remained optimistic with Niti Aayog Vice Chairman Arvind Panagariya's statement that resolution of bad loans in the banking system is on right track and will open the door to rapid credit expansion and growth. Some support also came with the report that foreign investors have pumped in over Rs 10,000 crore in the Indian debt markets this month so far, following the RBI's decision to cut key interest rates. Adding to the optimism, Union Minister of State for Finance and Corporate Affairs Arjun Ram Meghwal said that the number of tax slabs in the Goods and Services Tax (GST) regime would be reduced with improvement in revenue.  Private report stating that the Indian economy is at the cusp of entering its strongest growth phase and a full blown bull market is yet to play out with the wide-based Nifty expected to touch 11,500 in 2018, too aided sentiments. Market participants shrugged off wholesale price index (WPI) inflation data which increased to 1.88% in the month of July versus 0.90% in the month of June and 0.63% during the corresponding month of the previous year. Build up inflation rate in the financial year so far was 0.62% compared to a build up rate of 3.81% in the corresponding period of the previous year. Also, investors have not paid any attention towards India's industrial production data which entered the negative territory in June. India's industrial output contracted by 0.1% in the month of June 2017, as compared to an expansion of 8% in the previous year-ago period, also lower than 2.8% growth in May. Finally, the BSE Sensex surged 235.44 points or 0.75% to 31,449.03, while the CNX Nifty was up by 83.35 points or 0.86% to 9,794.15.

The US markets closed mostly lower on Tuesday, the Dow industrials managed third day of gains, but overall the main benchmarks ended little changed amid better-then-expected retail sales data and an abatement of tensions between the US and North Korea. Tuesday's weak showing comes after an upbeat close on Monday, when the S&P gained 1% for the first time in three months. Tensions between the two nations appeared to ease, with North Korean leader Kim Jong Un deciding not to launch a threatened missile attack on Guam. On the economy front, sales at US retailers surged in July to the highest level of 2017, aided by strong demand for new autos and Amazon's Prime Day shopping specials. Sales at retailers nationwide jumped 0.6% last month. A mysterious decline in spending at the end of the second quarter, meanwhile, vanished after fresh government revisions based on newly incorporated sales data. Retail sales actually rose 0.3% in June instead of falling 0.2% and sales in May were flat. The retail report can be quite volatile and subject to large revisions. The Nasdaq dropped 7.22 points or 0.11 percent to 6,333.01, the S&P 500 edged lower by 1.23 points or 0.05 percent to 2,464.61, while the Dow Jones Industrial Average gained 5.28 points or 0.02 percent to 21,998.99. 

Crude oil futures turned lower on Tuesday, on data showing weaker-than-expected oil demand in China the world's second-largest consumer, reducing the prospect of oil inventories falling below the five-year average. Meanwhile, an announcement by the Nigerian subsidiary of Royal Dutch Shell to lift a force majeure on Bonny Light crude exports, also added to oversupply jitters. Also, EIA had said it expected to see a climb in crude output from key U.S. shale regions of 117,000 barrels per day (bdp) in September to 6.149 million bpd. Benchmark crude oil futures for September delivery ended down by $0.04 or 0.1 percent to $47.55 on the New York Mercantile Exchange. In London, Brent crude for September delivery ended lower by $0.12 at $50.85 a barrel on the ICE.

Indian rupee pared most of its early gains but ended marginally higher against the American currency on Monday on continued dollar selling by banks and exporters. Sentiments remained optimistic with Niti Aayog Vice Chairman Arvind Panagariya's statement that resolution of bad loans in the banking system is on right track and will open the door to rapid credit expansion and growth. Besides, good going in the domestic equity market too supported the rupee. However, gains were muted as market participants remained cautious ahead of the key consumer price inflation (CPI) data, which will be released later in the day. On the global front, dollar edged higher against yen on Monday, pulling away from last week's near 4-month low, with rising tensions between the United States and North Korea seen as the key to the near-term outlook. Finally, the rupee ended at 64.12, 2 paise stronger from its previous close of 64.14 on Friday.

The FIIs as per Monday's data were net sellers in equity and debt segments both. In equity segment, the gross buying was of Rs 4134.26 crore against gross selling of Rs 5963.69 crore, while in the debt segment, the gross purchase was of Rs 418.37 crore with gross sales of Rs 1107.26 crore.

The US markets made a mixed closing in last session and while the Dow extended its gains amid better-than-expected retail sales data and an abatement of tensions between the U.S. and North Korea, S&P 500 and Nasdaq ended marginally in red. The Asian markets too have made a mixed start tailing the US market, though the attention is turning away from geopolitics, back to economic data. Some indices in the region are up on revival in U.S. retail sales that bolstered prospects that growth will accelerate in the second half. The Indian markets before going for a holiday had shown a smart bounce back with the major averages adding gains of over half a percent in last session. Today, the start is likely to be in green and traders will be reacting to some positive statements by the Prime Minister Narendra Modi who on 70th Independence Day promising to lead the country on a new track of economic progress, said his government would intensify the fight against black money and corruption. Traders will also be getting some support with report that India's trade deficit narrowed to $11.45 billion in July from a month ago, following a slowdown in merchandise imports. Also, recording a growth of over 3.9 percent on the back of a healthy rise in shipments of engineering goods,  petroleum products and chemicals, Indian exports in July grew at $22.5 billion. However, there will be some concern too, with wholesale inflation rising to 1.88 percent in July as prices of some commodities increased in the first month of Goods and Services Tax (GST) rollout. The steel stocks will be in action, as domestic crude steel production witnessed a 4.6 per cent increase at 8.45 million tonnes (MT) in July. There will be some buzz in the PSU stocks, on report that the government is in advanced stage of appointing advisers for proposed strategic sales in state-run firms such as Scooters India, BEML, Pawan Hans and Hindustan Prefab.

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

Nifty Top volumes

• Hero MotoCorp plans to launch three new scooter models by next fiscal as part of strategy to enhance its leadership position as erstwhile partner Honda challenges its number one spot.
• Bosch has reported a fall of 20.10% in its net profit at Rs 302.61 crore for the quarter ended June 30, 2017 as compared to Rs 378.72 crore for the same quarter in the previous year.
• Lupin and its alliance partner Natco has received the final approval of ANDA from the USFDA for Lanthanum Carbonate Chewable Tablets.
• Reliance Industries' telecom arm - Reliance Jio Infocomm has added over 6 million wireless subscribers in the month of June.