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Indian markets ended higher for the second consecutive session on Friday, starting the June series on a positive note, helped by gains in heavyweight RIL and buying across sectors. Today, markets are likely to get gap-up opening after the US reached a tentative deal over the weekend to raise the debt ceiling, which will likely avert a looming default. Foreign fund inflows likely to aid domestic sentiments. Foreign Portfolio Investors (FPIs) have pumped Rs 37,316 crore in Indian equities in May so far, primarily due to strong macroeconomic fundamentals and reasonable valuation of stocks. This is the highest investment by FPIs in the last six months. Besides, foreign institutional investors (FIIs) bought shares worth Rs 350.15 crore, while domestic institutional investors (DIIs) purchased shares worth Rs 1840.98 crore on May 26, provisional data from the National Stock Exchange showed. Some support will come as Union minister Ashwini Vaishnaw said enabling policies and grassroot initiatives of the Modi-led government have led to social and economic transformation of the country since 2014, and the nation is all set to become the fourth largest economy in the world within two years. Additional support will come as World Economic Forum (WEF) President Borge Brende said India is expected to clock the highest growth among the world’s big economies this year and the country’s economy is witnessing the ‘famous snowball effect’ that will lead to more investments and more jobs. Traders may take note of report that domestic rating agency Icra expects GDP growth in January-March period of 2022-23 at 4.9 per cent, a modest step-up from the 4.4 per cent recorded in preceding quarters, driven by the services sector. However, there may come cautiousness as Chairman of the CII Committee on EXIM Sanjay Budhia said economic recession in Germany is likely to impact India’s exports from various sectors like chemicals, machinery, apparel and electronics to the European nation. Traders may be concerned as RBI said India’s foreign exchange reserves dropped by $6.052 billion to $593.477 billion during the week ended May 19. There will be some reaction in infrastructure related stocks with report that as many as 384 infrastructure projects, each entailing an investment of Rs 150 crore or more, have been hit by cost overruns of more than Rs 4.66 lakh crore in January-March quarter. 

The US markets ended higher on Friday as President Joe Biden and top congressional leaders reached a tentative deal to raise the debt limit. Asian markets are trading mostly in green on Monday tracing gains on Wall Street.

Back home, Indian equity benchmarks rallied around a percent with Sensex recapturing 62,500 mark and nifty ending just shy of 18,500 mark, after reports suggested that U.S. lawmakers are inching closer to an agreement that would raise the debt limit for about two years and cap federal spending at the same level as fiscal 2023 for two years. Report that India will have normal monsoon this year too aided sentiments. Markets made a positive start supported by sharp fall in oil prices overnight coupled with continued FII inflows aided the domestic sentiments. The provisional data from the National Stock Exchange showed foreign institutional investors (FIIs) bought shares worth Rs 589.10 crore on May 25. The investors’ mood remained up-beat throughout the day and there appeared not even an iota of profit booking, as investors continued hunt for fundamentally strong stocks. Markets gained strength as traders took encouragement with report that India’s services exports are expected to overtake merchandise exports in the next five years on the back of above-par growth in emerging areas of service economy. Traders also took note of Chief Economic Adviser V Anantha Nageswaran’s statement that there are signs of private sector investment cycle unfolding and sectors like steel and cement have reached a stage where greenfield investment will take place. Markets extended gains and ended near intraday high levels as traders cheered reports of Normal Monsoon this year. India has reconfirmed its expectation of a normal monsoon this year, alleviating concerns regarding weather-related impacts on inflation. During the June-September season, the rainfall is projected to be around 96 percent of the long-term average. Sentiments also got boost with foreign brokerage expressing confidence in India’s enduring structural narrative and believes that it is only a matter of time before the BSE benchmark Sensex crosses the remarkable 1,00,000 milestone. Finally, the BSE Sensex surged 629.07 points or 1.02% to 62,501.69 and the CNX Nifty was up by 178.20 points or 0.97% to 18,499.35.

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