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Indian equity markets ended sharply higher on Monday on the back of positive global cues. Today, the markets are likely to make negative start on weak cues from US markets amid rising crude oil prices. There may be cautiousness in the markets as a private report said that it has cut its FY23 real GDP expansion estimate for India by 0.40 per cent to 7.2 per cent on slower global growth. It said the GDP growth will slow down to 6.4 per cent in FY24, adding that this is lower by 0.30 per cent compared to the earlier estimate. Further, traders may be concerned as the ministry of food and public distribution has said that rice stocks in the central pool are likely to plunge below the buffer norm by 2.2 million tonne (MT) or 16%, if the free ration scheme - Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) - is extended to the whole of the second half of the current financial year. The ministry said running the scheme for October-March FY23 with the current grain composition will cost the exchequer a massive Rs 90,000 crore if not higher. However, some respite may come later in the day on report that retirement fund body EPFO is likely to approve this month a proposal to enhance its investments in equities to up to 20 percent of the investible deposits from the current limit of 15 percent. At present, EPFO can invest 5 to 15 percent of the investible deposits in equity or equity-related schemes. Traders may get some encouragement as Minister of State for Finance Pankaj Chaudhary said the government has taken several supply-side measures to tame rising inflation. There may be some buzz in road and construction sector stocks as rating agency Crisil said India’s national highway construction will likely reach only 32-34 km per day during the current financial year as input prices are expected to remain elevated. It expects the pace of highway construction to pick up post monsoon.

The US markets ended lower on Monday after bank stocks erased earlier gains and Apple shares fell on a report saying the company plans to slow hiring and spending growth next year. Asian markets are trading mostly lower on Tuesday on the back of negative cues markets US markets.

Back home, rising for a second straight session, Indian equity benchmarks ended on a buoyant note and gained nearly one and a half percent on Monday, taking positive cues from Asian and global markets. After the gap-up start, the benchmarks gradually inched higher, as traders got encouragement with SBI Research in its latest report stated that the income of farmers has grown in the range of 1.3-1.7 times in FY22 from the FY18 levels on average while grain exports soared to over $50 billion. For certain crops in some states (like soyabean in Maharashtra and cotton in Karnataka) farmers' income more than doubled in FY22 from FY18 levels. Traders were also getting support with Reserve Bank of India (RBI) in its article stating that the impact of US Federal Reserve’s announcement in November last year to taper its asset purchases was moderate on Indian financial markets largely due to the country’s strong external position in 2021. Some support also came after private report stated that India’s real gross domestic product (GDP) growth for the financial year 2022-23 is expected to be above 7 percent despite global headwinds.  Domestic sentiments remained firm in second half of trading session, after the Reserve Bank of India said in its latest monthly bulletin that the Indian economy remains resilient despite formidable global headwinds and amidst fears of a recession. The bulletin said that in spite of geopolitical spillovers, 'There are sparks in the wind that ignite the innate strength of the economy and set it on course to becoming the fastest growing economy in the world, though besieged it might be by fears of recession'. Some support also came after Agriculture Minister Narendra Singh Tomar expressed hope that monsoon rains, which are crucial for Kharif sowing, will progress in the coming days and said it is too early to comment on the paddy acreage. Traders also took a note of the Reserve Bank of India (RBI) data showed that the RBI remained net buyer of the US currency in May, after it purchased $2.001 billion on net basis from the spot market. The RBI purchased $10.143 billion from the spot market and sold $8.142 billion. Traders overlooked Credit Rating Agency ICRA’s report stated that states have budgeted 36 per cent higher capital expenditure during this financial year (FY23), which may lead to a sharp rise in their fiscal deficit to Rs 8.4 lakh crore.  Finally, the BSE Sensex rose 760.37 points or 1.41% to 54,521.15 and the CNX Nifty was up by 229.30 points or 1.43% to 16,278.50. 

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