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Indian markets ended a percent higher on Monday led by strong gains in metals, FMCG and financial stocks. Today, the markets are likely to begin the month of June on a firm note following mostly positive cues from global peers. Investors are eyeing manufacturing PMI data to be released later today. Better-than-expected GDP numbers likely to support the market sentiments. Amid the coronavirus pandemic, India's GDP grew at 1.6 per cent in the January-March quarter of the fiscal year 2020-21, higher than the street forecast, but witnessed a contraction of 7.3 per cent for the entire fiscal year. Even then, the figure beat the CSO's estimate of 8 per cent contraction. Traders will be taking encouragement as Chief Economic Adviser K V Subramanian said the overall impact of the second wave of Covid-19 on the country's economy is not likely to be large but cautioned about an uncertainty surrounding the pandemic going ahead. Some support will come as Fitch Ratings says the impact of the second Covid-19 wave on rated Indian firms is expected to be manageable, as most companies’ credit profiles are supported by their strong market positions, adequate balance sheets, liquidity and diversified operations. Additionally, the output of eight core sectors jumped by 56.1 per cent in April mainly due to low base effect and uptick in production of natural gas, refinery products, steel, cement and electricity. However, traders may be concerned as the Organisation for Economic Co-operation and Development (OECD) cut its growth projection for India for FY22 to 9.9 per cent from 12.6 per cent estimated in March, as the second wave of coronavirus infections has paused economic recovery in Asia's third largest economy. Traders may take note of report that the Centre’s fiscal deficit for the financial year 2020-21 settled at 9.2 per cent of the gross domestic product, marginally below the government’s revised target of 9.5 per cent. This was on the back of better-than-expected revenue receipts with expenditure staying broadly at the level targeted in the revised estimates of the Budget. Meanwhile, India reported 126,698 fresh Covid-19 infections, taking the caseload to 28,173,655. This is the lowest spike in daily infections since April 8. Auto stocks will be in focus reacting to their monthly sales figures. Defence stocks will be on investors radar after the Defence Ministry notified the second negative import list of 108 items that can now be only purchased from indigenous sources.

The US markets were shut on Monday for a holiday. Asian markets are trading mostly in green on Tuesday as traders await gauges of manufacturing activity and key American jobs data later in the week to help assess the economic outlook.

Back home, Indian equity benchmarks continued their uptrend on Monday with the Nifty hitting a fresh record high, due to strength in index heavyweights such as Reliance Industries, ICICI Bank and Bharti Airtel ahead of the gross domestic product (GDP) data for the fourth quarter. A steady decline in daily COVID-19 caseload also strengthened investor sentiment. The Health Ministry said India reported the lowest daily new coronavirus infections in 50 days with 1,52,734 cases, taking the tally to 2,80,47,534 on Monday, while the active caseload declined to 20,26,092. Markets started the week on cautious note, as SBI Research analysis of EPFO payroll data shows that net job creation in the economy fell by 16.9 lakh in FY21 over the previous fiscal. Additionally, India Meteorological Department (IMD) said that the arrival of monsoon over Kerala is likely to delayed by two days and it is now expected to make an onset over the state by June 3. But, key indices soon gained traction in late morning deals, taking support from Revenue Secretary Tarun Bajaj’s statement that Indian economy has not suffered as much this year amid the second wave of COVID-19 as compared to last year when there was complete lockdown. Giving two scenarios, he said if Rs 1.10 lakh crore GST is collected per month, the deficit in states’ revenue would be Rs 1.50 lakh crore. If Rs 1.15 lakh crore GST is collected monthly, then that deficit would be Rs 1.25 lakh crore. So since Rs 1.58 lakh crore would be borrowed this fiscal towards compensating states, the extra borrowing, over and above what is the shortfall this year, would be utilised to make good the shortfall in states’ revenue of previous years. Domestic sentiments also remained positive, as the finance ministry expanded the scope of the Rs 3 lakh crore Emergency Credit Line Guarantee Scheme (ECLGS), which will now offer concessional loans to hospitals for setting up on-site oxygen generation plants. Adding more comfort among traders, the Ministry of Labour and Employment announced additional benefits for workers through social securities schemes run by the EPFO and the ESIC amid the COVID-19 pandemic. Finally, the BSE Sensex rose 514.56 points or 1.00% to 51,937.44, while the CNX Nifty was up by 147.15 points or 0.95% to 15,582.80.

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