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Indian markets ended lower on Friday dragged mainly by heavyweight banking stocks after the Reserve Bank of India (RBI) maintained the status quo on interest rates as expected. Today, the start of new week is likely to be positive tracking gains in global markets coupled with fall in coronavirus cases in the country. With a little over 100,000 new infections across India in the past 24 hours, daily cases in the country have dropped to the lowest level seen in over two months, marking a decline in the brutal second wave of Covid-19. India reported 101,232 new infections. Among major Indian states, Delhi, Tamil Nadu, Uttar Pradesh, Maharashtra and Gujarat have announced the partial lifting of restrictions from today. Traders will be taking encouragement with report that GST tax collections remained above Rs 1 lakh crore mark for the eighth straight month in May, indicating that the impact of the devastating second wave of Covid infections on the economy may have been limited. Some support will come as Rajiv Kumar, Vice-Chairman, NITI Aayog said he is confident that every organisation will revise their growth projections to 10-10.5 per cent once they witness the growth rate by October. Traders may take note of report that foreign investors have infused close to Rs 8,000 crore into Indian equities in the first four trading sessions of June as risk-on sentiment improved amid rapidly falling new Covid cases and robust corporate earnings. However, there may be some cautiousness as the Reserve Bank of India’s (RBI’s) May round of survey showed consumer confidence has fallen to an all-time low as consumer perceptions on the general economic and employment situations have lowered further. Meanwhile, Reserve Bank of India (RBI) Governor Shaktikanta Das said banks and non-banking financial companies (NBFCs) need to strengthen their capital position as there could be stress due to the second wave of COVID-19. Banking stocks will be in focus as RBI data showed bank credit grew by 5.98 percent to Rs 108.33 lakh crore while deposits rose by 9.66 percent to Rs 151.67 lakh crore in the fortnight ended May 21, 2021. There will be some reaction in MSME stocks as Union minister Nitin Gadkari stressed on increasing the share of the MSME sector in the country's GDP to 40 per cent from 30 per cent currently. Gadkari said the world is now favouring India instead of China.

The US markets ended higher on Friday led by technology shares after a tepid U.S. monthly jobs report relieved investor concerns the Federal Reserve might rein in monetary stimulus soon. Asian markets are trading mostly higher on Monday after the anxiously awaited May U.S. payrolls report showed the recovery on track but not so hot that it might bring forward a policy tapering from the Federal Reserve.

Back home, Indian equity benchmarks edged lower on Friday on account of profit booking in banking shares after the Reserve Bank of India (RBI) held key interest rates steady at record lows as widely expected and maintained it accommodative stance to revive the country's economic growth. After making cautious start, markets managed to keep heads in green terrain in morning deals, as traders took some support with union Minister Anurag Singh Thakur’s statement that financial inclusion is a top priority for the government and that promoting financial education would help in realising the collective potential. Some optimism also came with Commerce Secretary Anup Wadhawan’s statement the time frame to resume negotiations for the stalled free trade agreement with the European Union (EU) and to initiate fresh talks for a pact with the UK will be very early and the talks will start soon after completion of the preparatory work. However, indices traded lower in the second half, extending losses amid selling pressure. Some anxiety also came as the RBI revised its estimate for economic growth to 9.5 per cent for the current fiscal from an earlier projection of 10.5 per cent because of the adverse impact of the second wave of coronavirus infections. On inflation, RBI Governor Shaktikanta Das said that retail inflation based on the consumer price index (CPI) is likely to be 5.1 per cent during the current fiscal, adding the recent drop fall in inflation provides elbow room, policy support from all sides required to regain growth momentum. But, key gauges managed to trim some losses in fag-end of the trading session, taking support from reports that overall hiring activity has shown some improvement with a marginal 1 percent month-on-month contraction recorded in May as against a decline of 14.95 percent in April. The job postings during May stood at 2,047 compared to 2,072 in April on the Naukri.com platform. Traders also took a note of NITI Aayog CEO Amitabh Kant’s statement that in order to shape a post-COVID reality, there is no way out for India but growth. He also emphasised that India has an opportunity to usher in change that will see its society transform within a generation. Finally, the BSE Sensex fell 132.38 points or 0.25% to 52,100.05, while the CNX Nifty was down by 20.10 points or 0.13% to 15,670.25.

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