Indian equity markets commenced the week on a sluggish note as the benchmarks showcased an unenthusiastic performance on Monday and settled with moderate cuts of over quarter percent. Marketmen turned cautious over the Centre's future reform policies in view of appointment of Yogi Adityanath as the Chief Minister of the country's most populous state. The MP from Gorakhpur, who lacks administrative experience, was unanimously elected the BJP legislature party leader at a meeting of the newly elected MLAs, in a move that took many by surprise. Sentiments remained subdued with a report that the all India Consumer Sentiments Index, measured by the BSE and CMIE, has hit a one-year low at 92.25 compared to 99.65 a year ago. This comes even as the wholesale price index based inflation jumped up to a 39-month high of 6.55%. However, losses remained capped with the report that the Cabinet approved four bills to implement a planned Goods and Services Tax (GST) bills, paving the way for Prime Minister Narendra Modi to implement the landmark tax reform from July. The four bills are likely to be taken up by Parliament this week and a separate state GST bill in state assemblies later. Some support also came with the report that the implementation of GST is likely to be fiscally neutral and its impact on inflation is expected to be less than 20 basis points. Further, India has begun the process of dismantling some of the last remaining controls in the foreign direct investment (FDI) framework. The department of economic affairs (DEA) has floated a draft Cabinet note for inter-ministerial consultation to scrap the Foreign Investment Promotion Board (FIPB), in line with a plan announced by finance minister Arun Jaitley in his February 1 budget. Finally, the BSE Sensex declined 130.25 points or 0.44% to 29518.74, while the CNX Nifty was down by 33.20 points or 0.36% to 9,126.85. 

The US markets closed mostly lower on Monday, as investors were reluctant to make big bets without major economic or corporate news. Chicago Fed President Charles Evans said that the Federal Reserve is on track to raise interest rates twice more this year after a policy tightening last week and it could be more or less aggressive depending on inflation and fiscal policies from the Trump administration. The public comments from Evans were among the first since the US central bank lifted its policy rate a notch last week, as expected. It also forecast roughly two more moves in 2017 in a nod to low unemployment and some inflation pressures. Evans, who is a voter on the Fed's policy-setting committee this year and supported last week's move, also echoed a comment from Fed Chair Janet Yellen that suggested the central bank could try to push inflation, now at 1.7 percent, above a 2-percent target. On the economy front, the Chicago Fed national activity index rose more-than-expected last month. Federal Reserve Bank of Chicago said that Chicago Fed National Activity Index rose to a seasonally adjusted 0.34, from -0.02 in the preceding month whose figure was revised up from -0.05. The Dow Jones Industrial Average lost 8.76 points or 0.04 percent to 20,905.86, S&P 500 dropped 4.78 points or 0.20 percent to 2,373.47, while the Nasdaq was up 0.53 points or 0.01 percent to 5,901.53.

Crude oil futures slumped on Monday to their lowest level since the end of November  despite reports that OPEC may extend its supply quota experiment beyond this year. OPEC members are cutting production in an effort to drive up oil prices, but a robust U.S. output has prevented any significant rally. Benchmark crude oil futures for May delivery declined by $0.56 or 1.2% to $48.22 on the New York Mercantile Exchange. In London, Brent crude for May delivery ended down by $0.31 at $51.45 on the ICE.

Indian rupee ended stronger against dollar on Monday, due to increased selling of the American currency by banks and exporters. Local currency got some support with the report that the implementation of GST is likely to be fiscally neutral and its impact on inflation is expected to be less than 20 basis points. Moreover, Foreign investors pumped in $3.4 billion in the capital markets so far this month, buoyed by expectations that BJP's landslide poll victory is a precursor to “bold reformist policies” by the government. Besides, dollar weakness against some currencies overseas also added to the positive milieu of Indian currency. On the global front, sterling hit a three-week high against dollar on Monday, as a bringing-forward of expectations for when the Bank of England will hike interest rates drove investors to reconsider their record-high bets against the pound. Finally, the rupee ended at 65.36, 11 paise stronger from its previous close of 65.47 on Friday.

The FIIs as per Monday's data were net buyers in equity and debt segments both. In equity segment, the gross buying was of Rs 11445.07 crore against gross selling of Rs 9845.05 crore, while in the debt segment, the gross purchase was of Rs 1512.13 crore with gross sales of Rs 1175.91 crore.

The US markets went through another lackluster session and ended flat with a negative bias, as many traders stuck to the sidelines amid a quiet day on the U.S. economic front and shrugged off disappointment with the outcome of the G20 meeting. The Asian markets have made mostly a positive start and barring the Japanese market, which opened after a long weekend, all are trading in green as the dollar declined after Federal Reserve officials reignited the debate on the timing of further policy tightening. The Indian markets declined in last session following the weakness in Asian counterparts and disappointed by the outcome of the G20 summit over the weekend in Germany on trade and climate change. Today, the start is likely to be in green and some recovery can be seen as the Asian peers have made a positive start. Traders will be getting support with Cabinet clearing four supporting GST legislations, paving the way for their introduction in Parliament. Once approved by Parliament, the states would start taking their SGST bill for discussion and passage in the respective state assemblies. There will be some somberness in defence, ports and coal sector stocks on report that, as many as five sectors including them failed to attract any foreign direct investments during the April-December period of the current fiscal. There will be buzz from the primary market too, where the much awaited Avenue Supermarts, the operator of retail chain D-Mart will get listed. The company's Rs 1,870 crore initial public offering got overwhelming response.

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

Nifty Top volumes

• NTPC has commissioned the 2nd unit of 660 MW of Mouda Super Thermal Power Station Stage-II.
• ONGC has inked definitive agreements to buy out debt-ridden GSPC's entire 80% stake in KG-basin natural gas block for $1.2 billion.
• Tata Motors has launched its ‘lifestyle vehicle' HEXA in Jammu and Kashmir.
• BHEL has successfully commissioned another 660 MW supercritical thermal unit in Maharashtra.