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Indian markets ended higher on Friday with the Nifty posting a record closing high as falling COVID-19 infection rates boosted sentiment. Today, the start of session is likely to be negative amid muted trend in Asian peers. Investors will be eyeing GDP data for the March quarter slated to be out today, along with the core sector data for April. There will be some cautiousness as an 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. However, the FY21 numbers are better than the FY20 net job creation, which had declined by 28.9 lakh, further cementing the view that the economy is not creating new employment opportunities. Traders may take note of the India Meteorological Department’s (IMD) statement 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. Though, falling COVID-19 infection rates in India may lift sentiment. India has been witnessing a steady decline in daily cases. The country recorded 153,485 fresh Covid-19 cases in the last 24 hours, the lowest daily count in 48 days or since April 13, 2021. Some support may come as the all-powerful Goods and Service Tax Council decided to exempt from integrated GST Covid-related items which are imported on payment basis for donating to the government or on recommendation of state authority to any relief agency, till August 31. These items include medical oxygen, concentrators, certain diagnostic markers test kits and COVID-19 vaccines, etc. Besides, the government has expanded the Rs 3-trillion Emergency Credit Line Guarantee Scheme (ECLGS) to help businesses hit by the second wave of the Covid-19 pandemic. Dubbed ECLGS 4.0, the scheme has added the civil aviation sector and loan to health institutions for on-site oxygen generation plants. Banking stocks will be in focus as Indian Banks Association (IBA) Chairman Rajkiran Rai said that the second wave of COVID-19 has impacted the collections of Public Sector Banks (PSBs) in the month of May. There will be some reaction in real estate industry stocks with a private report that after a pick-up in sales of apartments in Tier II and Tier III cities in the March quarter of 2021, the transactions dropped in April as many states imposed local lockdowns to prevent the spread of the Covid-19 pandemic. Infrastructure industry stocks will be in limelight with report that as many as 470 infrastructure projects, each worth Rs 150 crore or more, have been hit by cost overruns totalling more than Rs 4.38 lakh crore. There will be some reaction in aviation industry stocks with report that domestic air travel is set to become costlier as the Civil Aviation Ministry raised the lower limit on fares by 13 to 16 per cent.

The US markets ended higher on Friday as investors brushed off a stronger-than-expected inflation reading, as both the Dow and S&P 500 indexes clinched their first weekly gain in the past three weeks. Asian markets are trading mostly in red on Monday as investors continue to weigh inflation risks and the strength of the economic recovery.

Back home, Indian equity benchmarks ended higher by over half percent on Friday, tracking gains in index heavyweights Reliance Industries, Mahindra & Mahindra, HDFC Bank and HDFC amid positive cues from global markets. Further, decline in daily COVID-19 caseload too bolstered investor sentiment. Markets made optimistic start and traded in green for whole day as traders took some support with a private report that the government is hopeful of a speedy launch of single-dose COVID-19 vaccine Sputnik Light in India and all stakeholders, including the Russian manufacturer and its Indian partners, have been directed to fast-track the application and regulatory approval procedures for the jab to boost the country's vaccination drive. Sentiments remained positive with the Reserve Bank stating that it will ensure that system-level liquidity remains comfortable during 2021-22 in alignment with the stance of monetary policy, and monetary transmission continues unimpeded while maintaining financial stability. Indian bourses continued their firm trade in second half of the session, taking support from report that the size of the Reserve Bank of India’s (RBI) balance sheet, which is reflective of activities carried out by it in pursuance of currency issue function as well as monetary policy and reserve management, has increased by Rs 3,72,876.43 crore, i.e., 6.99 percent from Rs 53,34,792.70 crore as on June 30, 2020 to Rs 57,07,669.13 crore as on March 31, 2021. The increase on the asset side was mainly due to increase in foreign and domestic investments by 11.48 percent and 13.75 percent, respectively. Meanwhile, with an aim to boost export potential of India’s agricultural and processed food products during the COVID-19 pandemic, the Agricultural and Processed Food Products Export Development Authority (APEDA) has organised the second virtual trade fair (VTF) for horticultural produce. Finally, the BSE Sensex rose 307.66 points or 0.60% to 51,422.88, while the CNX Nifty was up by 97.80 points or 0.64% to 15,435.65.

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