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Indian markets ended Monday's volatile session on a positive note led by gains in banking and financial stocks. Today, the start of session is likely to be optimistic tracking firm global cues coupled with fall in fresh coronavirus cases in the country. India continued to record steady decline in the number of fresh coronavirus cases with the daily toll slipping below the 200,000-mark. India's fresh Covid cases stood at 1.95 lakh. It is the lowest level of cases in the last 41 days. Traders will be taking encouragement with the commerce and industry ministry’s statement that foreign direct investments (FDI) into the country grew 19 per cent to $59.64 billion during 2020-21 on account of measures taken by the government on the fronts of policy reforms, investment facilitation and ease of doing business. Some support will come as RBI data showed bank credit grew by 6.02 per cent to Rs 108.69 lakh crore and deposits increased by 9.87 per cent to Rs 152.17 lakh crore in the fortnight ended May 7, 2021. Traders may take note of report that a Reserve Bank of India (RBI) study has advocated a mix of fiscal and monetary policies to mitigate economic downturn, saying demand side channel needs to be complemented with a conducive monetary transmission mechanism from the supply side. However, there may be some cautiousness as domestic ratings agency Icra forecast a 2 per cent GDP growth in the fourth quarter of 2020-21, and a 7.3 per cent contraction for the full fiscal year. From a GVA or gross value added perspective, the agency pegs Q4 growth at 3 per cent and the full year contraction at 6.3 per cent. There will be some buzz in banking stocks as the Reserve Bank said it will consider amalgamation of District Central Co-operative Banks (DCCBs) with State Cooperative Banks (StCBs) subject to various conditions, including that a proposal should be made by the state government concerned. Aviation stocks will be in focus with ICRA’s report that the second wave of the coronavirus pandemic is likely to delay recovery in air passenger traffic with an 80-85 per cent growth year-on-year this fiscal against the earlier estimate of 130-135 per cent. There will be some reaction in jewellery industry stocks as the Centre further extended the deadline for mandatory hallmarking of gold jewellery and artefacts by a fortnight till June 15 in view of the COVID-19 pandemic. There will be some earnings announcements too to keep the markets buzzing.

The US markets ended higher on Monday as investors regained an appetite for risk following two straight weeks of losses. Asian markets are trading in green on Tuesday following overnight gains on Wall Street.

Back home, Indian equity benchmarks traded volatile and ended marginally in the green on Monday, helped by gains in heavyweight financial stocks such as SBI, Larsen & Toubro and Axis Bank. Traders took some support as India reported Covid-19 cases below the 250,000-mark for the second consecutive. The fresh caseload stood at 2.4 lakh. Amid a drop in cases, a few states have hinted at the possibility of easing lockdown from next month onwards. Some support also came in with a private report stating that the RBI surprised the Centre with a record Rs 99,122 crore in surplus transfer for FY21 and this will help the government tide over the revenue losses from lockdowns and extend more support to the pandemic hit industries and to the poor people. Traders also got relief after industry body Assocham has demanded from the government a 'concentrated and right kind' of relief package for MSME sector, which was most affected by covid-19 pandemic. Besides, RBI data showed the country's foreign exchange reserves rose by $563 million to reach $590.028 billion in the week ended May 14. However, gains remain capped as some concern came with rating agency ICRA stating that slackening economic momentum driven by the second wave of Covid-19 infections in India has emerged as a concern with bruised sentiment, high healthcare costs and fuel expenses likely to limit discretionary purchases in the immediate term. Some anxiety also came as overseas investors withdrew Rs 4,444 crore from Indian markets in May so far amid concerns over the second wave of the coronavirus pandemic and its possible impact on the Indian economy. Traders also took a note of report that the GST Council is its upcoming meeting, scheduled to be held on May 28, is likely to take a call on levy of 12 per cent tax on import of oxygen concentrators for personal use. Finally, the BSE Sensex rose 111.42 points or 0.22% to 50,651.90, while the CNX Nifty was up by 22.40 points or 0.15% to 15,197.70.

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