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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.

On the global front, Asian markets ended mostly lower on Friday, while European markets were trading mostly in red, as investors await a key U.S. jobs report later in the day, which could provide more clarity on the economic recovery and the potential for higher inflation. Additionally, traders remain concerned that efforts to control the high coronavirus cases caused by highly contagious variants of the virus in most markets are leading to more restrictions and lockdowns is several areas in the region. Back home, on the sectoral front, banking stocks were in limelight 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 too were 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.

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.   

The BSE Sensex touched high and low of 52,389.02 and 51,952.70, respectively and there were 13 stocks advancing against 16 stocks declining, while 1 stock remain unchanged on the index.     

The broader indices ended in green; the BSE Mid cap index rose 0.63%, while Small cap index was up by 0.78%.

The top gaining sectoral indices on the BSE were Industrials up by 1.32%, Oil & Gas up by 1.23%, Capital Goods up by 1.12%, Metal up by 0.69% and Utilities up by 0.67%, while Bankex down by 0.95%, Consumer Durables down by 0.75%, FMCG down by 0.39%, Energy down by 0.18% and Healthcare down by 0.12% were the top losing indices on BSE.

The top gainers on the Sensex were Bajaj Finserv up by 2.53%, ONGC up by 2.24%, Larsen & Toubro up by 1.81%, Bajaj Finance up by 1.56% and HDFC up by 1.42%. On the flip side, Nestle down by 1.97%, SBI down by 1.38%, HDFC Bank down by 1.25%, ICICI Bank down by 1.14% and Axis Bank down by 1.11% were the top losers.

Meanwhile, Chief Economic Advisor KV Subramanian has said 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. He stated ‘now, several states have started removing many restrictions and if we speed up the vaccination drive in our country, our economy will start recovering.’

Talking about the ongoing COVID-19 vaccination drive in the country, He said, ‘India will be able to achieve vaccination for all by December. If we vaccinate people in three shifts each day, then, we can vaccinate 1 crore people in a day. This is definitely ambitious, but not impossible. I have taken both doses of vaccine and appeal to all to get themselves vaccinated as soon as possible.’

He mentioned that the ongoing vaccination drive can significantly 'lower down' the impact of the pandemic. Thus, the more people are vaccinated, the more it will lower down the impact of the third wave and will not be as harmful as expected. Besides, He said that COVID-19 is not going to impact country’s fiscal deficit target and disinvestment target.

The CNX Nifty traded in a range of 15,733.60 and 15,622.35 and there were 25 stocks advancing against 25 stocks declining on the index.      

The top gainers on Nifty were Tata Motors up by 3.42%, Grasim Industries up by 3.31%, Coal India up by 2.78%, Bajaj Finserv up by 2.58% and ONGC up by 2.16%. On the flip side, Nestle down by 2.00%, SBI down by 1.22%, Hindalco Industries down by 1.11%, HDFC Bank down by 1.11% and Axis Bank down by 1.05% were the top losers.

European markets were trading mostly in red; UK’s FTSE 100 decreased 16.46 points or 0.23% to 7,047.89 and France’s CAC fell 1.25 points or 0.02% to 6,506.67, while, Germany’s DAX increased 1.27 points or 0.01% to 15,633.94.

Asian markets ended mostly lower on Friday. Japanese shares retreated as investors await a key US jobs report later in the day, which could provide more clarity on the inflation outlook, while worries about the extension of the Covid-19 state of emergency in several major areas too weighed on market sentiment. Street has predicted an improvement for May, with 650,000 jobs added, compared with April's surprisingly tepid gain of 266,000. The unemployment rate last month is forecast at 5.9%, down from 6.1% in April. However, Chinese shares ended marginally higher despite renewed worries over Sino-US tensions. US President Joe Biden expanded and updated a blacklist of Chinese companies with alleged ties to defence or surveillance technology sectors.

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