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Indian markets rose to all-time highs on Tuesday led by gains in financials and FMCG stocks. Broader markets were also positive for the day with the midcap and smallcap indices up around half a percent each. Today, the start of session is likely to be pessimistic tracking lackluster global cues as investors await the US Federal Reserve’s interest rate decision. Traders will be concerned as global forecasting firm Oxford Economics said retail inflation spike in May might cause the RBI to revisit its focus on growth risks and added that a rate hike is still unlikely this year. There will be some cautiousness as India reported 62,226 new cases in the last 24 hours. With this, the country's total coronavirus caseload has reached 29,632,261. However, some respite may come later in the day as the government data showed that India’s merchandise exports grew 69.35 per cent year-on-year in May to $32.27 billion on account of low-base effect as well as rising demand from external markets. The growth has been driven by demand for items such as petroleum goods, engineering goods and gems and jewellery. Some support may come as the unemployment rate in India has improved to a six-week low of 8.7 percent, according to a survey by the Centre for Monitoring Indian Economy (CMIE). The jobless rate for the week ended June 13 fell to 8.7 percent from 13.6 percent a week ago, according to CMIE data. Traders may take note of report that foreign institutional investors were net buyers of domestic stocks worth Rs 633 crore while domestic institutional investors (DII) were net sellers once again, of securities worth Rs 649 crore. There will be some buzz in pharma stocks with Fitch Ratings’ report that Indian pharmaceutical companies' sales will grow robustly in the financial year ending March 2022 (FY22) as sales normalise in categories affected by the pandemic in previous year. There will be some reaction in insurance stocks as the Department for Promotion of Industry and Internal Trade (DPIIT) notified the government's decision to increase the foreign direct investment (FDI) limit in the insurance sector under the automatic route to 75 per cent from 49 per cent earlier. Meanwhile, the Rs 520-crore initial public offering (IPO) by Dodla Dairy, which is priced in the range of Rs 421-428 per share, opens for subscription today. Besides, the Rs 2,144-crore IPO of Krishna Institute of Medical Sciences will open with a price band of Rs 815-825 per share.

The US markets ended lower on Tuesday as investors waited to hear whether the mixed bag of data coming in about the economy will push the Federal Reserve to let up on its massive support for markets. Asian markets are trading mostly in red on Wednesday as investors looked ahead to data releases in China as well as the US Federal Reserve’s interest rate decision.

Back home, Indian stock markets traded in green for whole day and finally settled at all-time closing highs on Tuesday, as declining COVID-19 infections prompted more parts of the country to open businesses, with sentiment aided by upbeat broader markets. Traders took support with report that after making a late entry, the south-west monsoon has progressed steadily and, in the first fortnight, covered almost two-thirds of the country, which is almost 15 days ahead of schedule. Sentiments remained positive with SBI Research’s report that if there is no third wave of Covid-19 pandemic, the fiscal position of the Centre and the states will be much better than budgeted for FY22 and the states may garner Rs 60,000 crore more in tax collections at Rs 8.27 lakh crore this fiscal year than they have budgeted. Some optimism also came in with Federation of Indian Export Organisations (FIEO) stating that the order book position of exporters are healthy and the growth story will continue to be a mixed one as outbound shipments of both value added goods and raw material will contribute to push the overall exports of the country. It said India has started on a good note in 2021 and exports figures so far have been encouraging. However, key gauges cut some gains in final hour of trade, as the government report stating that India's retail inflation shot up to six-month high of 6.3 per cent in May, after easing to a three-month low of 4.23 per cent in April. Inflation, based on Consumer Price Index (CPI), has breached the Reserve Bank of India's (RBI) target range for the first time after five months. Some concern also came as SBI Ecowrap report suggested that the space for monetary accommodation is over, as the economy battles yet again to come out of the Covid-induced slowdown, and the Reserve Bank of India (RBI) will face multiple challenges in terms of boosting India's growth rate and stabilising the rupee. Also, Foreign Institutional Investors (FII) were net sellers of domestic stocks on Monday, pulling out Rs 503 crore. Meanwhile, amidst both support to as well as calls for a review of its new norms for appointing auditors by financial institutions, the Reserve Bank has stuck to its stance but has clarified certain doubts in the industry on the tenure and eligibility criteria among others. Finally, the BSE Sensex rose 221.52 points or 0.42% to 52,773.05, while the CNX Nifty was up by 57.40 points or 0.36% to 15,869.25.

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