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Indian markets fell on Friday amid weakness across sectors, suffering their worst single-day fall in three weeks, as investors globally feared aggressive hikes in COVID-era interest rates will hamper economic growth. Today, start of new week is likely to be gap-down tracking losses across global markets. Investors will be eyeing India’s retail inflation figures for May to be out later in the day. Some cautiousness will come as RBI data showed that after rising for two consecutive weeks, the country’s foreign exchange reserves declined by $306 million to $601.057 billion in the week ended June 3. However, some respite may come later in the day as the National Statistical Office said India’s factory output growth accelerated to an eight-month high at 7.1 per cent in April on the back of a lower base. Some support may come as Fitch Ratings revised up its outlook for India’s long-term foreign currency Issuer Default Rating (IDR) to stable from negative after a gap of two years. Traders may take note of Chief Economic Advisor (CEA) Anantha Nageswaran’s statement that India has shown an exemplary resilience in recovering from a crisis due to the COVID-19 pandemic. He added all major activities and parameters of the economy have crossed their pre-COVID levels, and it is now enjoying macroeconomic tailwinds. There will be some buzz in the power stocks as, Power Minister RK Singh said India's power demand this year has jumped by a record 40,000-45,000 MW per day as an intense heat wave sweeps through northern parts of the country, the economy expands, and electricity reaches millions of unelectrified homes. Defence stocks will be in focus with a private report that the Indian Air Force plans to acquire 114 fighter jets of which 96 would be built in India and rest 18 would be imported from a foreign vendor chosen for the project, giving impetus to India’s Make in India initiative. There will be some reaction in media stocks ahead of Indian Premier League's media rights auction. The final day of bidding process will declare the winner from shortlisted candidates - Sony, Zee, Disney Star, and Viacom18. Day 1 of the media bidding process saw bids hike up to Rs 43,000 crore for digital and television.

The US markets ended sharply lower on Friday as a steeper-than-expected rise in US consumer prices in May fueled fears of more aggressive interest rate hikes by the Fed. Asian markets are trading deeply in red on Monday as tracking sell-off on the Wall Street.

Back home, Indian equity benchmarks ended Friday’s session near intraday lows, with Sensex and Nifty breaching their crucial 54,350 and 16,250 levels, respectively, following weakness in global counterparts and fear of faster policy tightening to combat inflation. The bourses started the session in red and remained under pressure for whole day, as investors got cautious with External Affairs Minister S Jaishankar stating that the Russia-Ukraine war has thrown up a crisis of fuel, food and fertiliser that will lead to hunger situations and have a very significant inflationary impact. Some anxiety spread among investors with India Ratings stated that the country’s current account deficit is likely to hit a three-year high of 1.8 per cent or $43.81 billion in FY22, as against a surplus of 0.9 per cent or $23.91 billion in FY21. Besides, persistent capital outflows also weighted down on the domestic sentiments. Foreign Institutional Investors (FII) continued to be net sellers of domestic equities, pulling out Rs 1,512 crore from stocks on Thursday. Further, in the last hours of the trade, selling got intensified on the counters, as domestic sentiments weakened further as the United Nations said Foreign Direct Investment inflows to India declined $19 billion to $45 billion in 2021 but the country still remained among the top 10 global economies for FDI last year. Traders also remained cautious as basket of crude oil that India buys has hit a decade high of $121 per barrel, but retail selling prices of petrol and diesel continue to remain frozen. The Indian basket on June 9, 2022 touched $121.28, matching levels seen in February/March 2012. Market participants overlooked Assocham’s statement that the Reserve Bank's decision to raise the benchmark lending rate by 50 basis points to 4.9 per cent will help the Indian economy in the medium term. Finally, the BSE Sensex fell 1016.84 points or 1.84% to 54,303.44 and the CNX Nifty was down by 276.30 points or 1.68% to 16,201.80.

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