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Indian markets slumped to 13-month lows on Thursday, failing to hold on to initial gains, as nervousness set in across investors globally after the Fed announced the biggest hike in the key interest rate in almost three decades. Today, markets are likely to make flat-to-positive start despite weak global cues. Traders will be taking encouragement as a periodic labour force survey by the National Statistical Office (NSO) showed the unemployment rate for persons aged 15 years and above in urban areas dipped to 8.2 per cent in January-March 2022 from 9.3 per cent in the year-ago quarter. Some support will come as advance tax paid by companies in the first quarter of the fiscal year grew 46 per cent over that in the equivalent period in 2021-22, indicating healthy tax buoyancy that will provide the government the cushion to absorb part of the higher subsidy bill. Besides, with an improvement in the economy and some degree of softening in inflation, the Reserve Bank of India (RBI) believes that the country is better placed to avoid the pitfalls of stagflation. India’s gross domestic product (GDP) growth for FY22 is estimated at 8.7%, which is above the pre-pandemic level. Meanwhile, the Goods and Services Tax (GST) Council will meet on June 28-29 to deliberate on the way forward after end of the five-year compensation period for states on June 30, including rationalization of tax rates in a phased manner, as a multi-year goal due to inflationary concerns. There will be some buzz in the banking stocks as M Rajeshwar Rao, deputy governor of the Reserve Bank of India (RBI), said gross non-performing assets (NPAs) of the banking sector dropped below 6 per cent as of March 2022 - the lowest since 2016 - and net NPAs fell to 1.7 per cent during the same period, indicating that the sector has remained largely unscathed from the ill-effects of the Covid-19 pandemic so far. Telecom stocks will be in focus after the telecom department invites players for pre-bid conference of 5G spectrum on June 20. There will be some reaction in airline stocks as the jet fuel prices were sharply hiked by 16 per cent, recording an all-time high, in order to be in-line with the soaring international crude oil prices. Fertilizer industry stocks will be in limelight with a private report that the landed price of imported urea in the country has softened by almost 27 per cent in May 2022 from the peak seen in December 2021. However, the rates are still considerably higher than the same period last year by almost 95.4 per cent.

The US markets ended deeply in red on Thursday as investors' grappled with recession fears post the US Federal Reserve's aggressive rate action. Asian markets are trading mostly in red on Friday following a continued sell-off on Wall Street overnight.

Back home, extending decline for fifth straight session, Indian equity bourses ended at their lowest point of the day on Thursday, tracking feeble global cues. Initially, the benchmarks opened with an uptick, as sentiments got a boost with a report that India has witnessed the sharpest rise among the Asian economies, with a six-position jump from 43rd to 37th rank on the annual World Competitiveness Index compiled by the Institute for Management Development, largely due to gains in economic performance. Some support also came as Madhaiyaan Angamuthu, chairman of Agricultural and Processed Food Products Exports Development Authority (APEDA) said India’s agricultural and processed food product exports will continue to surge in the current fiscal after a record shipment valued at $25.6 billion in 2021-22 because of global demand for the agricultural commodities. Traders took a note of a report by Microfinance Institutions Network (MFIN) showing that the microfinance industry's Gross Loan Portfolio (GLP) grew by 10.04 per cent to Rs 2,85,441 crore as of March 2022. The industry's GLP stood at Rs 2,59,377 crore in March 2021. However, the rally was short-lived as key gauges witnessed a sharp fall in second half of trading sessions, as traders turned cautious as India added 12,213 fresh COVID-19 cases in the last 24 hours, witnessing a 38.4 per cent jump from 8, 822 cases. This is the first time since February 26 that the viral infections have crossed the 10,000 mark in a day. Some concern also came after RBI Deputy Governor M Rajeshwar Rao said that despite the improvement in asset quality, financial institutions, including banks, need to proactively undertake stress testing of loan books to examine their loss absorption limits and take steps to improve them wherever required. Adding the cautiousness among market participants, Foreign Institutional Investors (FIIs) have remained net sellers for the ninth consecutive month given the weak global sentiment. They have net sold more than Rs 31,000 crore worth of shares so far in June on top of more than Rs 2.2 lakh crore of selling in the previous five straight months. Finally, the BSE Sensex fell 1045.60 points or 1.99% to 51,495.79 and the CNX Nifty was down by 331.55 points or 2.11% to 15,360.60.

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