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Indian equity benchmarks finished a volatile session with minor cuts on Monday as investors remained cautious ahead of the RBI's policy decision later this week. Indian markets made a gap down opening, as traders were concerned as continuing its heavy selling spree for the eighth consecutive month, foreign investors pulled out nearly Rs 40,000 crore from the Indian equity market in May on fears of an aggressive rate hike by US Federal Reserve that dented investor sentiments. Adding more pessimism, the Union Health Ministry data showed that India logged 4,270 new coronavirus infections taking the tally of COVID-19 cases to 4,31,76,817, while the daily positivity rate was recorded above one per cent after 34 days.

However, key gauges trimmed all of their losses to enter into green for a brief period in late afternoon deals, following a positive start in Europe. Traders took some support from RBI data showed that the country's foreign exchange reserves increased by $3.854 billion to $601.363 billion in the week ended May 27. Some support also came with private report stated that hiring activity in India increased by 40 per cent year-on-year in May 2022 led by strong growth in the sectors like travel, hospitality, retail, real estate and banking and financial services.

But, markets failed to hold gains and ended marginally lower amid reports that with inflation showing no signs of abatement, the Reserve Bank is likely to increase the benchmark lending rate in quick succession in its forthcoming monetary policy review, a hint for which has already been given by Governor Shaktikanta Das. Traders took note of report that Prime Minister Narendra Modi stressed the need to make India's banks and currency an important part of the international trade and supply chain. He also exhorted financial institutions to continuously encourage good financial and corporate governance practices.

On the global front, European markets were trading higher as investors cheered reports suggesting that the United States is mulling lifting some tariffs on China to fight inflation. Market participants also await a European Central Bank (ECB) policy meeting later this week for confirmation whether the central bank will raise rates at the July 21 policy meeting. Asian markets settled mostly higher on Monday as investors reacted to reports of possible U.S. tariff cut on China's goods, loosening of Covid-19 restrictions in Beijing and improved Caixin Services PMI data for May from China.  However, US Fed Vice Chair Lael Brainard reportedly said it's 'very hard to see the case for a pause' in rate hikes and the central bank still has 'a lot of work to do to get inflation down to the 2 percent target.'

Back home, coal industry stocks were in focus as Coal Minister Pralhad Joshi said to address the country’s energy demand which is set to double by 2040, thermal coal requirement would go up to around 1,500 million tonnes in the next 18 years. Stocks related to agriculture industry were in watch with a private report that the government may announce higher-than-usual increases in minimum support prices (MSP) for the summer-sown crops in 2022-23 year soon, taking into consideration a sharp rise in costs of farming inputs.

Finally, the BSE Sensex fell 93.91 points or 0.17% to 55,675.32 and the CNX Nifty was down by 14.75 points or 0.09% to 16,569.55.   

The BSE Sensex touched high and low of 55,832.28 and 55,295.74, respectively. There were 9 stocks advancing against 21 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index fell 0.15%, while Small cap index was down by 0.54%.

The top gaining sectoral indices on the BSE were Metal up by 0.72%, Oil & Gas up by 0.50%, Energy up by 0.41%, Auto up by 0.21% and Bankex up by 0.15%, while Finance down by 3.39%, Realty down by 0.87%, Consumer Disc down by 0.79%, Consumer Durables down by 0.59% and Capital Goods down by 0.53% were the losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 0.99%, Indusind Bank up by 0.78%, Mahindra & Mahindra up by 0.77%, ITC up by 0.70% and Kotak Mahindra Bank up by 0.67%. On the flip side, Asian Paints down by 2.36%, Ultratech Cement down by 1.68%, Bajaj Finserv down by 1.34%, Nestle down by 1.01% and Larsen & Toubro down by 0.79% were the top losers.

Meanwhile, India has achieved the target of supplying 10 per cent ethanol-blended petrol five months ahead of schedule. This translates into a forex impact of over Rs 41,500 crore, reduced greenhouse gas (GHG) emissions of 27 lakh tonnes and has also led to the expeditious payment of over Rs 40,600 crore to farmers. In order to cut oil import dependence and address environmental issues, the country is aiming to double the blend by 2025-26. The original target for doping 10 per cent ethanol, extracted from sugarcane and other agri commodities, in petrol originally was November 2022 but this has been achieved in June thanks to tremendous effort by state-owned fuel retailers Indian Oil Corporation (IOC), Bharat Petroleum Corporation (BPCL) and Hindustan Petroleum Corporation (HPCL).

India is the world's fifth largest producer of ethanol after the US, Brazil, EU and China. Ethanol worldwide is largely used for consumption but nations like Brazil and India also dope it in petrol. The Government of India, with the aim to enhance India's energy security, reduce import dependency on fuel, save foreign exchange, address environmental issues and give a boost to the domestic agriculture sector, has been promoting the Ethanol Blended Petrol (EBP) Programme. It has advanced the nation's target of making petrol with 20 per cent ethanol by five years to 2025 in a move that's expected to save $4 billion annually.

This increased blending will expand the use of renewable energy in the world's third-biggest oil importer and help turn the nation's surplus rice and damaged foodgrains into ethanol. The 'National Policy on Biofuels' notified by the Government in 2018 envisaged an indicative target of 20 per cent ethanol blending in petrol by year 2030. However, considering the encouraging performance, due to various interventions made by the Government since 2014, the target of 20 per cent ethanol blending was (last year) advanced from 2030 to 2025-26.

The CNX Nifty traded in a range of 16,610.95 and 16,444.55. There were 21 stocks advancing against 29 stocks declining on the index.

The top gainers on Nifty were Bajaj Auto up by 4.02%, JSW Steel up by 2.69%, Tata Consumer Product up by 1.66%, ONGC up by 1.52% and Apollo Hospitals Enterprise up by 1.51%. On the flip side, Shree Cement down by 3.14%, BPCL down by 2.61%, Asian Paints down by 2.52%, Ultratech Cement down by 1.74% and Hero MotoCorp down by 1.58% were the top losers.

European markets were trading higher;  UK’s FTSE 100 increased 112.46 points or 1.49% to 7,645.41, France’s CAC increased 75.76 points or 1.17% to 6,561.06 and Germany’s DAX increased 141.58 points or 0.98% to 14,601.67.

Asian markets settled mostly higher on Monday, despite the broadly negative cues from Wall Street last Friday. Japanese shares ended higher with local energy stocks topped the gainers list as oil prices climbed after Saudi Arabia raised prices sharply for its crude sales in July. Chinese and Hong Kong shares gained as Shanghai has lifted most of the corona-virus restrictions in recent days. Although, China's services activity contracted for the third month in a row in May suggesting a slow recovery in the world's second-largest economy, a private business survey showed. Meanwhile, markets in South Korea and Malaysia were shut for holidays.

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