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Indian equity markets ended with strong gains on Thursday as fall in daily coronavirus cases. Today, the markets are likely to make pessimistic start following negative cues from global markets. Traders will be eyeing the RBI's monetary policy outcome that will be announced today. The Reserve Bank of India’s Monetary Policy Committee began its bi-monthly deliberations on June 2, amid expectations of keeping a status quo on repo and reverse repo rates due to uncertainty over the impact of the second COVID-19 wave. However, some support may come later in the day as union Minister Anurag Singh Thakur said financial inclusion is a top priority for the government and that promoting financial education would help in realising the collective potential. Traders may also get some encouragement 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. He expressed hope that within this year, or close to the end of the year, the negotiations with both the regions should start. Meanwhile, Chief Economic Advisor KV Subramanian said that the second wave of COVID-19 has affected the momentum of economic recovery. However, he also pointed that he expects a recovery in the economy from July onwards. There will be some buzz in banking industry stocks as public sector banks have been at the forefront for advancing loans under the PM Street Vendors Atmanirbhar Nidhi (PM SVANidhi), and have sanctioned 2.316 million loans, about 95% of total loans sanctioned under this scheme as on May 31. Aviation stocks will be in focus as Domestic air traffic nosedived to 19.20 lakh passengers in May from around 57.3 lakh in April, registering a sharp 65-67 per cent month-on-month contraction on account of the second wave of the pandemic. With such a sharp fall, the domestic passenger traffic reached lower than the June-July 2020 levels.

The US markets ended lower on Thursday on wary about the Federal Reserve potentially shifting monetary policy. Asian markets are trading lower in early deals on Friday following the negative cues overnight from Wall Street as signs of a strengthening US recovery boosted bets for higher inflation and an earlier tapering of Federal Reserve stimulus.

Back Home, Indian equity benchmarks ended at record highs on Thursday after showing lacklustre trend in the previous two sessions, as firm global cues, a consistent fall in daily Covid-19 cases, and a stronger rupee kept market mood upbeat. The benchmarks staged a gap up opening, as traders took support with Minister of State for Finance Anurag Thakur’s statement that Indian economy is resilient and will rebound in the times ahead based on consistent reforms that have ensured strong fundamentals through these difficult times. Thakur has pointed out that consistent reforms and strong fundamentals have ensured that India had a swift rebound from a contraction of 24.4 percent in the first quarter to a growth of 1.6 percent in the fourth quarter of FY 2020-21. Benchmarks cut some of their gains during afternoon session after the survey report indicated that India’s service sector fell into contraction territory in the month of May, with the intensification of the COVID-19 crisis causing renewed declines in new business and output. As per the survey report, the seasonally adjusted Nikkei Services Business Activity Index fell to 46.4 in May from 54.0 in April. Further, the Nikkei India Composite PMI Output Index -- which measures both manufacturing and services - also eased to 48.1 in May from 55.4 in April. However, key gauges regained traction, taking support from Credit ratings agency Crisil in its latest report stated that the expanded Emergency Credit Line Guarantee Scheme (ECLGS) will help businesses like hotels, civil aviation and tour operators, which are the hardest hit by the second wave of COVID-19. It will also support build-up of healthcare infrastructure, mainly oxygen availability, in tier-2 and beyond cities and the hinterland. Traders took a note of Assocham’s report in which it has recommended the government to extend relief measures such as regulatory easing, wage support, and interest subsidy for the Micro Small and Medium Enterprises (MSMEs) which are reeling under the severe impact of COVID-19.  As the states are in the process of easing lockdowns, it said the trade and industry would need all-around support to pick up their business thread again. Investors also eyed the Reserve Bank of India's meeting on Friday where it is expected to keep its key rate at a record low but reaffirm its commitment to provide adequate liquidity as the country grapples with a deadly second wave of the COVID-19 pandemic. Finally, the BSE Sensex rose 382.95 points or 0.74% to 52,232.43, while the CNX Nifty was up by 114.15 points or 0.73% to 15,690.35.  

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