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Indian equity benchmarks were positive for second consecutive day and ended Tuesday’s session with gains of around two percent, led by a strong rebound across all sectors amid positive cues from the global markets. Domestic indices opened gap up and continued to gain strength throughout the day, as traders took support with the southwest monsoon entering Madhya Pradesh, Chhattisgarh, coastal Andhra Pradesh, Odisha, west Bengal, Jharkhand and Bihar on Monday, cumulative rainfall deficiency so far has been reduced to 5% from 25% reported on June 16. The India Meteorological Department (IMD) has predicted an intense spell of rainfall along the west coast in the next five days. Some support also came as retirement fund body EPFO has added 17.08 lakh net new subscribers in April 2022, nearly 34 per cent more than 12.76 lakh enrolled in the same month a year ago.

Local equity markets enlarged their gains in the late afternoon session, taking support from the commerce and industry minister Piyush Goyal’s statement that the proposed free trade agreement with the European Union, when implemented, will provide greater market access for several domestic sectors such as textiles, leather and sports goods in the EU market. Traders overlooked labour bureau's statement that retail inflation for farm and rural labourers increased to 6.67 per cent and 7 per cent, respectively in May, mainly due to higher prices of certain food items. Meanwhile, the pension Fund Regulatory and Development Authority (PFRDA) data showed that the number of subscribers in various schemes of the National Pension System (NPS) rose to 53.17 million in May 2022, registering a 24.07 per cent YoY growth. Till May 2021, the NPS subscribers numbers stood at 42.85 million.

On the global front, European markets were trading higher recovering slightly from last week's 17-month lows as the selloff paused, but major central banks' rate hike plans and global recession risks kept investors cautious. Asian markets ended mostly higher on Tuesday following the positive cues from European markets overnight, with traders picking up stocks at a bargain after the recent sell-off in global markets, the worst since 2020. However, traders remain worried about a recession amid bets of bigger interest-rate hikes from major central banks.

Back home, metal industry stocks were in watch as Industry body ISSDA termed the government's move to impose duty on steel products as knee jerk action which came as a shock to domestic steel industry. Stocks related to aviation sector also were in focus Director General of IATA said the airlines' losses globally are expected to be down from $52 billion in 2021 to $9.7 billion this year and industry-wide profit should be on the horizon in 2023.

Finally, the BSE Sensex rose 934.23 points or 1.81% to 52,532.07 and the CNX Nifty was up by 288.65 points or 1.88% to 15,638.80.

The BSE Sensex touched high and low of 52,799.40 and 51,808.76, respectively. There were 29 stock advancing against 1 stocks declining on the index.  

The broader indices ended in green; the BSE Mid cap index rose 2.42%, while Small cap index was up by 2.99%.

The top gaining sectoral indices on the BSE were Oil & Gas up by 5.96%, Energy up by 4.95%, Consumer Durables up by 3.93%, Metal up by 3.90% and Realty up by 3.79%, while there were no losing sectoral indices on the BSE.

The top gainers on the Sensex were Titan Company up by 5.92%, SBI up by 3.79%, TCS up by 3.17%, HCL Technologies up by 2.81% and Dr. Reddy's Lab up by 2.70%. On the flip side, Nestle down by 0.26% were the top losers.

Meanwhile, the finance ministry in its monthly economic review report has said that India is facing near-term challenges in managing its fiscal deficit, sustaining economic growth, reining in inflation and containing the current account deficit but the country is relatively better placed to weather these headwinds compared to other nations. It added near-term challenges need to be managed carefully without sacrificing the hard-earned macroeconomic stability. It said ‘Many countries around the world, especially developed countries, face similar challenges. India is relatively better placed to weather these challenges because of its financial sector stability and its vaccination success in enabling the economy to open up’.

As per the report, India's medium-term growth prospects remain bright as pent-up capacity expansion in the private sector is expected to drive capital formation and employment generation in the rest of this decade. Observing that the capex budget for 2022-23 is expected to underpin growth, the report said an upside risk to the budgeted level of gross fiscal deficit has emerged following cuts in excise duties on diesel and petrol. It said an increase in the fiscal deficit may cause the current account deficit to widen, compounding the effect of costlier imports, and weaken the value of the rupee thereby, further aggravating external imbalances, creating the risk (admittedly low at this time) of a cycle of wider deficits and a weaker currency.

However, the momentum of economic activities sustained in the first two months of the current financial year augurs well for India to continue to be the quickest growing economy among major countries in 2022-23. The report also said that the world is looking at a distinct possibility of widespread stagflation, but India is at low risk of stagflation, owing to its prudent stabilisation policies. Stressing that the Indian economy in 2021-22 has indeed fully recovered the pre-pandemic real GDP level of 2019-20, it said the real GDP growth in 2021-22 stands at 8.7 per cent, 1.5 per cent higher than the real GDP of 2019-20. India's GDP in nominal terms is now Rs 236.65 lakh crore or $3.2 trillion in 2021-22 compared to the pre-pandemic nominal GDP of $2.8 trillion in 2019-20.

The CNX Nifty traded in a range of 15,707.25 and 15,419.85. There were 48 stocks advancing against 2 stocks declining on the index.

The top gainers on Nifty were Titan Company up by 6.03%, Hindalco up by 5.99%, Coal India up by 4.69%, JSW Steel up by 4.46% and Tata Motors up by 4.02%. On the flip side, Nestle down by 0.10% and Apollo Hospital down by 0.02% were the top losers. 

European markets were trading higher; UK’s FTSE 100 increased 66.81 points or 0.94% to 7,188.62, France’s CAC increased 98.03 points or 1.66% to 6,018.12 and Germany’s DAX increased 141.35 points or 1.07% to 13,406.95.

Asian markets ended mostly higher on Tuesday in the absence of cues from Wall Street as the US stock markets were closed Monday for the Juneteenth federal holiday. Meanwhile, bargain hunting emerged at lower levels after stock markets selloff recently. But, investors are remained concerned about recession fueled by skyrocketing inflation and keenly awaiting US Fed Chair Jerome Powell’s testimony for fresh hints on the world’s most powerful central bank’s next rate hike move. Chinese shares settled down as China saw Covid-19 flare-up in cities such as Shenzhen, sparking worries about China’s uncertain recovery path.

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