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Indian markets finished a volatile session higher on Thursday - the last day of the May series of derivatives. Gains across most sectors pushed the headline indices higher, helping them halt a three-day-long losing streak. Today, benchmark indices are likely to make optimistic start tracking strength across global markets. Some support will come as economic research think-tank Centre for Monitoring Indian Economy (CMIE) has estimated that labour participation rate (LPR) was higher in rural India during the period January to April 2022. LPR, defined as the number of persons of the labour force employed as a percentage of working age population, is 40.9 in rural India as compared to 37.4 in urban India during the period January to April 2022. Besides, in a bid to push public expenditure, the government has relaxed norms for ministries and department to utilise unspent amounts in the subsequent quarter in the same financial year. However, there may be some cautiousness with SBI’s statement that upcoming release of official data for economic performance is likely to register a 2.7 per cent growth for the January-March period, and the FY22 growth is expected to be 8.5 per cent. Traders may take note of a private report that the Reserve Bank will opt for a larger, 0.50 per cent, hike in key rates at its next monetary policy review in June to protect medium term economic stability in face of the uncomfortable inflation situation. Meanwhile, the government has waived late fees for two months till June for delayed filing of GST returns for financial year 2021-22 by small taxpayers registered under the composition scheme. Sugar industry stocks will be in focus with a private report that India sugar prices are likely to remain firm despite New Delhi's move to cap exports as stockpiles are set to fall to the lowest level in five years amid record shipments and robust local demand. There will be some reaction in auto and insurance industry stocks as the ministry of road transport and highways revised base premium rates for third-party insurance of vehicles for the first time since the onset of Covid-19. As per a statement by the ministry, the new rates, which are applicable from 1 June, will see discounted prices for third party insurance in electric vehicles, hybrid vehicles, and educational institute buses. Further, the country's second largest manufacturer of non-urea fertilisers and DAP (diammonium phosphate) Paradeep Phosphates will make its debut on the bourses today. Its issue price is fixed at Rs 42. Investors awaited the last leg of corporate earnings from India Inc for cues.

The US markets ended higher on Thursday after optimistic retail earnings outlooks and waning concerns about overly aggressive interest rate hikes by the Federal Reserve put investors in a buying mood. Asian markets are trading in green on Friday thanks to strong results from regional tech firms and US retailers.

Back home, snapping 3-day losing run, Indian equity benchmarks made a sharp recovery and ended with gains of around a percent on Thursday led by buying in Metal, Banking and Basic Materials stocks. Benchmarks made positive start, as traders took support with a private report that India’s economy is expected to have grown at 9.2 per cent in the fiscal ended March 2022, after having contracted by 7.3 per cent in the previous financial year, aided by resilience in the rural economy, uptick in bank credit and rising GST collections. However, key gauges erased initial gains and soon slipped into red terrain in morning deals, as traders turned cautious with continued selling by foreign investors. Provisional data available on the NSE showed that foreign institutional investors (FIIs) have net sold shares worth Rs 1,803.06 crore on May 25. Some concern also came as research and ratings agency CRISIL in its latest study has said increased cost of solar modules and steel combined with higher logistics cost will impact 5 giga watt (GW) solar capacity under implementation in the private sector. Adding to the pessimism, a private report stated that the current price situation leaves hardly any scope for rationalisation of GST rates on goods and services. But, markets witnessed healthy short covering towards the closing hours that helped key indices to end higher. Some support came as real estate developers in the national capital region said the central government's move to ease prices of iron, steel and cement will provide a significant relief to builders as well as homebuyers. Traders overlooked report that Moody’s Investors Service slashed India's economic growth projection to 8.8 percent for 2022 from 9.1 percent earlier, citing high inflation. It stated the rise in crude oil, food, and fertilizer prices will weigh on household finances and spending in the months ahead. Rate hike to prevent energy and food inflation from becoming more generalized will slow the demand recovery's momentum. Finally, the BSE Sensex rose 503.27 points or 0.94% to 54,252.53 and the CNX Nifty was up by 144.35 points or 0.90% to 16,170.15.

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