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Indian markets ended lower on Tuesday with dragged mainly by banking and financial stocks. Meanwhile, losses in metals and auto sectors also weighed on the benchmarks. Today, the start of session is likely to be optimistic tracking gains in global markets. Traders will be taking encouragement with a private survey titled Smart Power India’s (SPI’s) Survey of Mini-grid Villages May 2021 which shows that overall economic activity in such villages was less affected in 2021 due to the pandemic that largely impacted the healthcare and educational sector. Some support will come as the Union Cabinet may soon clear a proposal to provide government guarantee to security receipts issued by the National Asset Reconstruction Company (NARCL) as part of resolution of bad loans. Indian Banks' Association (IBA), entrusted with the task of setting up a bad bank, has pegged the government guarantee to be around Rs 31,000 crore. Traders may take note of report that the latest credit push for the pandemic-hit sectors and other relief supports will have an additional 60 bps impact on the fiscal deficit, and can offer an additional liquidity window of Rs 70,000 crore to banks. However, there may be some cautiousness as a day after witnessing a sharp decline in the number of daily Covid-19 cases, India recorded 45,699 infections and 816 fatalities in the last 24 hours. The country's total coronavirus caseload stands at 30,316,000, while the death toll has jumped to 397,668. Meanwhile, the market regulator in its board meeting said appointment/re-appointment and removal of independent directors shall be through a special resolution of shareholders for all listed entities. Pharma stocks will be in focus as Pharma majors including Cipla, Dr Reddy’s Laboratories, Sun Pharmaceutical Industries and Torrent Pharmaceuticals will collaborate for the clinical trial of the investigational oral anti-viral drug Molnupiravir for the treatment of mild COVID-19 in an outpatient setting in India. There will be some reaction in oil & gas sector stocks as oil minister Dharmendra Pradhan said India's fuel demand, hit by a deadly second wave of coronavirus, would recover to pre-pandemic levels by the end of this year. Banking stocks will be in limelight with a private report that helped by faster pace of credit growth, the share of Indian private banks in total credit rose to 36.5 per cent in the financial year ended March 2021 (FY21) from 35.4 per cent a year ago.

The US markets ended higher on Tuesday lifted by technology stocks after an upbeat consumer confidence report. Asian markets are trading in green on Wednesday following overnight gains on wall street amid China is set to release its data on manufacturing activity.

Back home, Indian equity benchmarks fell for second straight session on Tuesday dragged by losses in Metal, Telecom, Oil & Gas and Banking shares. After making cautious opening, key indices traded tad lower as S&P Global cut its growth forecasts for some of Asia's top economies including India, the Philippines and Malaysia, offsetting upgrades to China and South Africa and much of Latin America. The estimates, which feed into S&P's closely-followed sovereign ratings, saw India's growth projection chopped to 9.5% from 11% due to its COVID-19 outbreak. Selling further crept in with a domestic rating agency ICRA stating that nearly a third of loans by NBFCs are in risky segments, and the already elevated non-performing assets ratio for such lenders are expected to rise by up to 1 percent in FY22 due to the impact of the second COVID-19 wave. Markets added losses in late afternoon session, despite data showing that unemployment rate came down further to 8.72% for the week ended June 27 from 9.35% in the previous week, but still remained higher than 8.16% recorded at the beginning of the second Covid-19 wave in early April. The unemployment rate has fallen on a fallen labour participation rate (LPR). The LPR fell from 40.5% in the previous week to 39.6%. Traders failed to get support with Federation of Indian Exports Organisation (FIEO) stating that the 'little ambitious' exports target of $400 billion for the current fiscal is achievable but it requires aggressive marketing strategy and venturing into new markets. FIEO President A Sakthivel also said that free trade agreements with countries including UK, Europe, Australia, and the US would help further push the country's exports. Traders also overlooked Niti Aayog Vice Chairman Rajiv Kumar’s statement that the fresh set of stimulus measures announced by the finance minister will not only accelerate the revival of the economy but also enable a bolstering of employment opportunities. Finance Minister Nirmala Sitharaman on Monday announced Rs 1.5 lakh crore of additional credit for small and medium businesses, more funds for the healthcare sector, loans to tourism agencies and guides, and waiver of visa fee for foreign tourists as part of a fresh package to support the pandemic-hit economy. Finally, the BSE Sensex fell 185.93 points or 0.35% to 52,549.66, while the CNX Nifty was down by 66.25 points or 0.42% to 15,748.45.

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