Markets likely to make positive start on Tuesday

Indian markets halted a six-day-long losing streak on Monday, though fears of aggressive rate hikes and their impact on economic growth kept investors on the back foot. Today, the markets are likely to make positive start tacking gains in Asian peers. Some support will come with the southwest monsoon entering Madhya Pradesh, Chhattisgarh, coastal Andhra Pradesh, Odisha, west Bengal, Jharkhand and Bihar on Monday, cumulative rainfall deficiency so far has been reduced to 5% from 25% reported on June 16. The India Meteorological Department (IMD) has predicted an intense spell of rainfall along the west coast in the next five days. Meanwhile, the government has extended the productivity-linked incentive scheme for the telecom industry by another year and has expanded its scope to cover design-led manufacturing. The Centre will provide additional incentives of over Rs 4,000 crore under the amended scheme. However, there may be some cautiousness as the finance ministry cautioned the re-emergence of the twin deficit problem in the economy, with higher commodity prices and rising subsidy burden leading to an increase in both fiscal deficit and current account deficit. It is also the first time the government has explicitly talked about the possibility of fiscal slippage in the current fiscal year. There will be some reaction in metal industry stocks Industry body ISSDA termed the government's move to impose duty on steel products as knee jerk action which came as a shock to domestic steel industry.

The US markets remained closed on Monday on account of Juneteenth National Independence Day. The Asian markets are trading mostly higher on Tuesday as investors overlooked persistent concerns about aggressive hikes in COVID-era rates and their impact on economic growth.

Back home, Snapping a six-day losing run, Indian equity benchmarks settled in green after a highly volatile session on Monday, helped by emergence of value buying in shares like HDFC, Hindustan Unilever and Ultratech Cement amid positive cues from European markets. Key indices made a cautious start and fluctuated between gains and losses throughout the day, on the back of recession fears coupled with aggravated foreign outflows from Indian equities. Foreign portfolio investors (FPIs) pulled out 31,430 crore equities so far in June. With this, the net foreign outflows from equities reached Rs 1.98 lakh crore in 2022 till now. Some concern also came with the latest data released by the Reserve Bank of India (RBI) showed India’s foreign exchange reserves declined $4.6 billion to $596 billion for the week ended June 10. The fall in total reserves was mainly because of a decline in foreign currency assets worth $4.5 billion. Adding more pessimism, a report stated that as many as 428 infrastructure projects, each entailing an investment of Rs 150 crore or more, have been hit by cost overruns of more than Rs 4.98 lakh crore. However, in the late afternoon trade, the indices made smart recovery as traders found support as the Income Tax department stated that the net direct tax collections till mid-June this fiscal increased 45 per cent to over Rs 3.39 lakh crore, buoyed by decent advance tax mop-up. Sentiments remained positive as Member of the economic advisory council to the prime minister -- Sanjeev Sanyal said that the country's internal market is in a good position and its macroeconomic stability is in a comfortable zone despite the ravage by the pandemic. He said that there has been an unprecedented crisis during the two-year-long pandemic and the Indian economy has emerged stronger after that. Some optimism also came with a private report stating that a combination of normal rainfalls aiding bumper agriculture output and the Reserve Bank of India (RBI) further hiking interest rates to cut easy money in the system hold key to bringing down multi-year high inflation triggered by surging food and fuel prices. Finally, the BSE Sensex rose 237.42 points or 0.46% to 51,597.84 and the CNX Nifty was up by 56.65 points or 0.37% to 15,350.15.