Indian stock markets have recovered all their losses and ended flat with a positive bias on Monday, due to strength in index heavyweights such as Reliance Industries, Bajaj Finance and ONGC amid positive cues from global markets. Markets, after opening on a negative note had extended losses in the first half, as some cautiousness came in as the GST Council, at its single-agenda meeting, decided to retain the GST on Covid-19 vaccines at 5 per cent. However, it temporarily slashed the tax rates on most supplies and also exempted drugs for treating the black fungus. Sentiments remained down-beat as Former RBI Governor D Subbarao expressed concerns over extreme unevenness in economic recovery and sharpening inequalities between upper-income segments and lower-income households in the country, cautioning that the trend will hit growth prospects going forward. Terming the uneven recovery morally wrong and politically corrosive he said liquidity in the domestic market and foreign fund inflows are leading to soaring prices of stocks and other assets despite disruptions due to the Covid pandemic. Benchmarks remained subdued in afternoon trade, as the wholesale price-based (WPI) inflation accelerated to a record high of 12.94 per cent in May, on rising prices of crude oil and manufactured goods. Low base effect also contributed to the spike in WPI inflation in May 2021. In May 2020, WPI inflation was at (-) 3.37 per cent. This is the fifth straight month of uptick seen in the wholesale price index (WPI)-based inflation. In April, 2021, WPI inflation hit double digit at 10.49 per cent. But, markets rebounded sharply in the second half, as overseas investors pumped in a net Rs 13,424 crore so far in June as risk-on sentiment improved with declining Covid-19 cases and hopes of early opening of economy. Depositories data showed that foreign portfolio investors (FPIs) invested Rs 15,520 crore in equities during June 1-11. Traders took note of the government data showing that the Index of Industrial Production (IIP) stood at 126.6 points in April this year. The IIP was at 54 points in April 2020 and 126.5 points in April 2019. As per the partial data, IIP growth works out to be 134 per cent in April 2021 over the same month last year, mainly due to the low base effect. Finally, the BSE Sensex rose 76.77 points or 0.15% to 52,551.53, while the CNX Nifty was up by 12.50 points or 0.08% to 15,811.85.   

The US markets ended mostly higher on Monday as investors rotated back into growth-oriented stocks ahead of a key Federal Reserve meeting. The Fed's two-day policy meeting will likely dominate investors' behavior this week. Although the central bank is not expected to take any action, its forecasts for interest rates, inflation and the economy could move the markets. The Fed could possibly move up its forecast for a rate hike after saying in its last quarterly update that it would keep its benchmark rate near zero through 2023. The advance by the Nasdaq reflected strength among tech stocks, with big-name companies like Apple, Netflix and Facebook posting notable gains. On the sector front, semiconductor stocks showed a strong move to the upside, driving the Philadelphia Semiconductor Index up by 1.4 percent to a two-month closing high. Strength was also visible among software stocks, as reflected by the 1 percent gain posted by the Dow Jones US Software Index. Meanwhile, considerable weakness among steel, oil service and housing stocks also partly offset the strength in the technology sector.

Crude oil futures ended marginally lower on Monday, falling sharply from the day's highs during the closing minutes of the session. British Prime Minister Boris Johnson announced that the next phase of England's lockdown reopening will be delayed by four weeks due to a surge of the Delta variant of Covid-19, weighing on oil prices. Traders weighed the prospects of Iranian oil returning to the market amid talks the sanctions on Iran may be lifted sometime in the foreseeable future. Crude oil futures for July fell $0.03 or 0.04 percent to settle at $70.88 barrel on the New York Mercantile Exchange. However, August Brent crude gained $0.17 to settle at $72.86 a barrel on London's Intercontinental Exchange.

Indian rupee ended significantly lower against dollar on Monday, on account of sustained dollar demand from importers and banks. Sentiments were fragile as the wholesale price-based (WPI) inflation accelerated to a record high of 12.94 per cent in May, on rising prices of crude oil and manufactured goods. Low base effect also contributed to the spike in WPI inflation in May 2021. In May 2020, WPI inflation was at (-) 3.37 per cent. This is the fifth straight month of uptick seen in the WPI-based inflation. In April, 2021, WPI inflation hit double digit at 10.49 per cent. On the global front, dollar consolidated gains on Monday after posting its biggest weekly rise in six weeks as traders cut their bearish bets before a much-anticipated Federal Reserve meeting that might signal a change in the outlook for U.S. monetary policy. Finally, the rupee ended 73.29, weaker by 22 paise from its previous close of 73.07 on Friday.

The FIIs as per Monday's data were net buyer in equity segment, while net seller in debt segment. In equity segment, the gross buying was of Rs 5165.19 crore against gross selling of Rs 5060.23 crore, while in the debt segment, the gross purchase was of Rs 1163.21 crore with gross sales of Rs 1233.86 crore. Besides, in the hybrid segment, the gross buying was of Rs 24.78 crore against gross selling of Rs 26.98 crore.

The US markets ended mostly higher on Monday helped by gains in several big-name tech companies including Apple. Asian markets are trading mostly in red on Tuesday following mixed cues overnight from Wall Street. Indian markets recovered early losses and ended marginally higher on Monday amid mixed global cues. Today, the markets are likely to make cautious start amid mixed cues from global peers. Traders will be concerned as the government report stated that India's retail inflation shot up to six-month high of 6.3 per cent in May, after easing to a three-month low of 4.23 per cent in April. Inflation, based on Consumer Price Index (CPI), has breached the Reserve Bank of India's (RBI) target range for the first time after five months. There will be some cautiousness as SBI Ecowrap report suggested that the space for monetary accommodation is over, as the economy battles yet again to come out of the Covid-induced slowdown, and the Reserve Bank of India (RBI) will face multiple challenges in terms of boosting India's growth rate and stabilising the rupee. Also, Foreign Institutional Investors (FII) were net sellers of domestic stocks on Monday, pulling out Rs 503 crore. However, traders may take note of report that India reported the lowest daily spike in infections since 31 March with 62,597 new cases in the last 24 hours. With this, the country's total coronavirus caseload has reached 29,570,035. Some support will come with report that after making a late entry, the south-west monsoon has progressed steadily and, in the first fortnight, covered almost two-thirds of the country, which is almost 15 days ahead of schedule. According to data from the India Meteorological Department (IMD), India received close to 28 per cent more rainfall than the average, between June 1 and June 14. Meanwhile, Amidst both support to as well as calls for a review of its new norms for appointing auditors by financial institutions, the Reserve Bank has stuck to its stance but has clarified certain doubts in the industry on the tenure and eligibility criteria among others. There will be some reaction in cement industry stocks as ICRA in its report stated that the second wave of Covid-19 has adversely impacted domestic cement production - the all India production declined 35 percent month-on-month in April 2021 and was lower by 4 percent compared to April 2019.

Support and Resistance: NSE (Nifty) and BSE (Sensex)

Nifty Top volumes

• UPL has received the prestigious Asian Sustainability Leadership Award for Excellence in Sustainability Performance Management for displaying commendable commitment to sustainability. 
• ITC's hospitality arm -- ITC Hotels is optimistic about domestic tourism prospects and planning to increase the number of properties under the brand Welcomhotel to 25 in a year from 19 now. 
• Tata Motors has received approval to raise Rs 500 crore through Rated, Listed, Unsecured, Redeemable, NCDs having face value of Rs 10,00,000 each, at par on private placement basis. 
• Eicher Motors' motorcycle arm -- Royal Enfield is anticipating the current fiscal to be one of the best for the company in terms of new model launches.