Indian equity benchmarks ended higher on Monday, with Sensex and Nifty garnering gains of 234 and 111 points, respectively, after the U.S. Federal Reserve Chair Jerome Powell made comments Friday to indicate the Fed may leave interest rates steady at its next meeting in June. Indices made a negative start of the day, as investors remain worried about the ongoing debt ceiling negotiations in the US, the resilience of the banking space and the geopolitical situation in Europe. However, markets soon staged recovery and remained higher for the whole day. Support came in as the RBI said rising for the second consecutive week, India's forex kitty jumped $3.553 billion to $599.529 billion for the week ended May 12. The overall reserves had jumped by $7.196 billion to $595.976 billion for the previous reporting week.  Some optimism also came in as the engineering export promotion council said India's exports of engineering goods to Russia jumped 11 times in April this year to $133.6 million as compared to year-ago month while the US and China markets continued to soften. Firm trade persisted over the Dalal Street in afternoon deals, as sentiments were optimistic, after the provisional payroll data released by the retirement fund body showed that formal sector workers under the Employees' Provident Fund Organisation surged by 13.2% to 13.9 million in 2022-23 compared to 12.2 million in 2021-22. However, upside remained capped, as the finance ministry said in its Monthly Economic Review for April that India's economy is likely to see downside risks to growth and upside risks to inflation, partly due to challenges in the country's external sector as well as weather-related uncertainties. Finally, the BSE Sensex rose 234.00 points or 0.38% to 61,963.68 and the CNX Nifty was up by 111.00 points or 0.61% to 18314.40.

The US markets ended mostly higher on Monday with technology shares outperforming the broad market. Investors largely refrained from making significant moves as they awaited updates on debt ceiling negotiations. President Joe Biden and House Speaker Kevin McCarthy, R-Calif., are due to hold talks on raising the debt ceiling. Treasury Secretary Yellen said on Sunday that the likelihood of the Treasury paying all US bills by June 15th is quite low. Meanwhile, hawkish comments from a few Fed officials have raised concerns about outlook for interest rates. Federal Reserve Bank of St. Louis President James Bullard said that he backed two more increases. Federal Reserve of Minneapolis President Neel Kashkari said if the central bank does pause, it should signal tightening is not over. Investors also seemed to wait for some key economic data this week. The report on personal income and spending, and the minutes of the Fed's latest monetary policy meeting are due this week.

Crude oil futures ended higher on Monday amid hopes the U.S. lawmakers will reach a debt ceiling deal soon and help the nation avoid a default. Meanwhile, the Group of Seven (G7) nations pledged at its annual leaders' meeting to enhance efforts to counter Russia's evasion of the price caps on its oil and fuel exports. The G7 meeting, however, upset China, the world's biggest oil importer. State-backed Chinese newspaper Global Times called the G7 an anti-China workshop. Benchmark crude oil futures for June delivery gained $0.44 or about 0.6 percent to settle at $71.99 a barrel on the New York Mercantile Exchange. Brent crude for July delivery rose $0.41 or 0.5 percent to settle at $75.99 a barrel on London's Intercontinental Exchange.

The Indian rupee ended weaker against the US dollar on Monday, weighed down by a strong greenback in the overseas market. Investors remained concerned ahead of developments on the U.S. debt ceiling and the trajectory of rate hikes in the world's largest economy. The market participants were eyeing a key meeting between U.S. President Joe Biden and House Republican Speaker Kevin McCarthy later in the day to discuss the debt ceiling. However, a firm trend in domestic equities and sliding crude prices in international markets capped losses in the local unit. On the global front, the dollar was broadly steady with U.S. debt ceiling negotiations set to resume and Federal Reserve Chair Jerome Powell having indicated he favours a meeting-by-meeting approach when it comes to future policy moves. Finally, the rupee ended at 82.84 (Provisional), weaker by 17 paise from its previous close of 82.67 on Friday.

The FIIs as per Monday's data were net buyers in equity segment, while net sellers in debt segment. In equity segment, the gross buying was of Rs 7376.13 crore against gross selling of Rs 6623.46 crore, while in the debt segment, the gross purchase was of Rs 948.61 crore against gross selling of Rs 1254.12 crore. Besides, in the hybrid segment, the gross buying was of Rs 80.10 crore against gross selling of Rs 119.69 crore.

The US markets ended mostly in green on Monday as investors awaited new updates on debt ceiling negotiations and Treasury Secretary Yellen said that the likelihood of the Treasury paying all U.S. bills by June 15th is quite low. Asian markets are trading mostly higher on Tuesday despite no deal over debt limit. Indian markets ended higher on Monday after the U.S. Federal Reserve Chair Jerome Powell made comments to indicate the Fed may leave interest rates steady at its next meeting in June. Today, markets are likely to get an optimistic start tracking positive cues from global markets. Foreign fund inflows likely to provide flip to the markets. Foreign institutional investors (FIIs) bought shares worth Rs 922.89 crore on May 22, provisional data from the National Stock Exchange showed. Some support will come as a Reserve Bank article said India's growth in the April-June quarter is expected to be driven by private consumption, supported by reviving rural demand, and renewed buoyancy in manufacturing. Traders will be taking encouragement with Reserve Bank of India (RBI) governor Shaktikanta Das' statement that the central bank's announcement of withdrawal of Rs 2,000 notes will have very marginal impact on the economy because it constitutes only 10.8 per cent of the currency in circulation. Some optimism will come as the federal finance ministry in its monthly economic review said that domestic demand will aid India's economy and help lay the foundation for the capex cycle, despite global headwinds that pose a downside risk to growth. Traders may take note of Jeremy Zook, a director at Fitch Ratings and the primary rating analyst for India, stating that the Indian government will try its best to meet the challenging fiscal deficit target of 4.5 percent of the GDP by 2025-26. Meanwhile, think tank GTRI said in a report that the government should not extend fiscal support under the production-linked incentive scheme (PLI) to small firm-dominated products like leather shoes and handicraft as the move may shift business away from those enterprises. Global Trade Research Initiative (GTRI) said small firms need assistance like access to technology and low-cost finance and not PLI. Investors await more of financial results from India Inc for domestic cues, with Ashok Leyland, Biocon, Dixon Technologies and NMDC due to post their earnings later in the day.

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

Nifty Top volumes

• Bharat Petroleum Corporation has entered into a strategic Memorandum of Understanding with Aspen Technology Inc., USA.
• NTPC's wholly owned subsidiary -- NTPC Green Energy has signed an agreement with HPCL Mittal Energy to collaborate in renewable energy and generation of green hydrogen. 
• L&T's construction arm -- L&T construction has secured EPC orders in India and overseas for its Power Transmission & Distribution Business. 
• JSW Steel's board has approved plans to raise funds up to Rs 17,000 crore through the issuance of various securities and tap the international markets to mop up $1 billion.