Markets likely to make slightly positive start on Tuesday

Indian markets ended higher for second straight session on Monday with gains of around half a percent each. Today, the start of session is likely to be marginally in green amid positive global cues. Traders await retail inflation and industrial production data due to be released this week for cue about the health of Indian economy. Investors will be taking encouragement with report that foreign institutional investors (FIIs) bought shares worth Rs 216 crore on a net basis in the cash market, while domestic institutional investors (DIIs) bought shares worth Rs 171 crore. Traders will also be taking some support with report that SEBI proposed an informant mechanism to blow the whistle on insider trading cases, wherein genuine whistleblowers could get monetary reward of Rs 1 crore as well as amnesty from regulatory action.Some support may also come with latest data from industry body the Association of Mutual Funds of India (Amfi) showing that average Assets Under Management (AUM) of mutual funds rose to Rs 25.43 trillion in May from Rs 25.27 trillion in the previous month on the back of increased inflows into equity-linked schemes. Meanwhile, the Crisil’s report showed that the system-wide non-performing assets stock has declined massively to 9.3 percent in FY19, much faster than the Reserve Bank's estimate and steeply down from 11.5 percent the year before. Bad loan recognitions accelerated largely due to a nudge from the Reserve Bank, which wanted bank balance sheets to reflect a true picture of the stress. Traders may take note of a report that banks will now provide cheque books and other facilities to basic account holders, with the Reserve Bank of India relaxing the norms on June 10. Though, the banks cannot ask the account holders to maintain any minimum balance in lieu of such facilities.  There will be some reaction in insurance stocks with a private report indicating that the insurance industry in India saw a growth spike after privatisation, but the penetration of products still remains low.

The US markets ended in green on Monday, buoyed by relief over the White House’s decision to drop a threat to hit Mexico with tariffs on billions of dollars of goods. Asian markets are trading mostly higher on Tuesday after the Trump administration shelved plans for tariffs against Mexico.

Back home, Indian equity bourses managed to settle with notable gains on Monday, with both the larger peers, Sensex and Nifty, closing higher by over 0.40% each. The start of the day was fabulous, aided by the Reserve Bank of India (RBI) Governor Shaktikanta Das’ statement that the revised guidelines to deal with stressed assets will sustain improvement in credit culture that have been ushered in by the efforts of the Government and the Reserve Bank so far and will go a long way in promoting a strong and resilient financial system in India. Traders also took support with a report that foreign investors have pumped in a net amount of Rs 7,095 crore into the Indian capital markets during the first week of June in anticipation of continued policy reforms. However, markets turned volatile in afternoon deals, after Commerce and Industry Minister Piyush Goyal said that slowdown in global trade and investment is of serious concern as it adversely affects economic growth, development and job creation. He has called for de-escalating trade tensions and reviving confidence in the rules-based multilateral trading system. But, in the last leg of trade, key indices extended their gains with Moody's Investors Service stating that the RBI's revised framework for the resolution of stressed assets is credit positive, because it brings back the focus on the need for the timely resolution of such assets and the buildup of loan loss provisioning against those assets, Traders remained positive with Trade Promotion Council of India’s statement that the government should take six concrete steps such as reducing cost and time of port clearance for goods and enhancing availability of credit with a view to boost exports. Finally, the BSE Sensex gained 168.62 points or 0.43% to 39,784.52, while the CNX Nifty was up by 52.05 points or 0.44% to 11,922.70.