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Indian markets recovered early losses and ended marginally higher on Monday amid mixed global cues. Today, the markets are likely to make cautious start amid mixed cues from global peers. Traders will be concerned as the government report stated 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. There will be some cautiousness 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. However, traders may take note of report that India reported the lowest daily spike in infections since 31 March with 62,597 new cases in the last 24 hours. With this, the country's total coronavirus caseload has reached 29,570,035. Some support will come 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. According to data from the India Meteorological Department (IMD), India received close to 28 per cent more rainfall than the average, between June 1 and June 14. 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. There will be some reaction in cement industry stocks as ICRA in its report stated that the second wave of Covid-19 has adversely impacted domestic cement production - the all India production declined 35 percent month-on-month in April 2021 and was lower by 4 percent compared to April 2019.

The US markets ended mostly higher on Monday helped by gains in several big-name tech companies including Apple. Asian markets are trading mostly in red on Tuesday following mixed cues overnight from Wall Street.

Back home, Indian stock markets have recovered all their losses and ended flat with a positive bias on Monday, due to strength in index heavyweights such as Reliance Industries, Bajaj Finance and ONGC amid positive cues from global markets. Markets, after opening on a negative note had extended losses in the first half, as some cautiousness came in as the GST Council, at its single-agenda meeting, decided to retain the GST on Covid-19 vaccines at 5 per cent. However, it temporarily slashed the tax rates on most supplies and also exempted drugs for treating the black fungus. Sentiments remained down-beat as Former RBI Governor D Subbarao expressed concerns over ‘extreme unevenness’ in economic recovery and ‘sharpening inequalities’ between upper-income segments and lower-income households in the country, cautioning that the trend will hit growth prospects going forward. Terming the uneven recovery ‘morally wrong and politically corrosive’ he said liquidity in the domestic market and foreign fund inflows are leading to soaring prices of stocks and other assets despite disruptions due to the Covid pandemic. Benchmarks remained subdued in afternoon trade, as the wholesale price-based (WPI) inflation accelerated to a record high of 12.94 per cent in May, on rising prices of crude oil and manufactured goods. Low base effect also contributed to the spike in WPI inflation in May 2021. In May 2020, WPI inflation was at (-) 3.37 per cent. This is the fifth straight month of uptick seen in the wholesale price index (WPI)-based inflation. In April, 2021, WPI inflation hit double digit at 10.49 per cent. But, markets rebounded sharply in the second half, as overseas investors pumped in a net Rs 13,424 crore so far in June as risk-on sentiment improved with declining Covid-19 cases and hopes of early opening of economy. Depositories data showed that foreign portfolio investors (FPIs) invested Rs 15,520 crore in equities during June 1-11. Traders took note of the government data showing that the Index of Industrial Production (IIP) stood at 126.6 points in April this year. The IIP was at 54 points in April 2020 and 126.5 points in April 2019. As per the partial data, IIP growth works out to be 134 per cent in April 2021 over the same month last year, mainly due to the low base effect. Finally, the BSE Sensex rose 76.77 points or 0.15% to 52,551.53, while the CNX Nifty was up by 12.50 points or 0.08% to 15,811.85.

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