The markets were in for a pleasant surprise last week. India's GDP beat all expectations to grow at 6.1% for 2022-23.

Following that positive surprise was the PMI data, which showed that this growth was not a flash in the pan but that the growth momentum continues.

Manufacturing PMI for May has risen to a 31-month high of 58.7 in May from 57.2 in April.

Data also showed that the government met its fiscal deficit target for 2022-23 thanks to higher-than-estimated net tax and non-tax revenues during the year.

The Centre's fiscal deficit was 6.4% in 2022-23.

Notably, there seems to be greater belief in the government's estimates.

It has generally been underpromising and over-delivering on its revenue numbers.

The US government managed to avoid a debt default, which was much relief to the market.

However, the question that remained was how to avoid political standoffs and avoid defaults at the 11th hour.

Indian Markets Last Week:

Stocks rose Friday and for the week. The sentiment was boosted by the US closing an enhanced debt limit. Hopes that the US Federal Reserve will skip an interest rate increase this month also lifted sentiment. Strong GDP growth and encouraging auto sales numbers and PMI data lifted stocks.

Government bond yields were down for the week in line with the fall in US yields. Yields have been mostly steady around the 7% level for the 10-year. Investors were of the view that the market was well-bought already. The market now awaits the outcome of the MPC meeting. More than the rate view, the stance will be keenly watched. The MPC is expected to hold rates again.

The rupee rose significantly for the week aided by strong foreign fund inflows. It was also helped by a fall in the dollar. The end to the US debt crisis boosted demand for riskier assets and weakened the dollar. Strong GDP growth numbers and inflows into stocks boosted the rupee. Last week, the Indian rupee had the best week in five.

Global Markets Last Week:

US Stocks closed higher as moderating wage growth in May indicated the Fed may skip a rate hike this month. Investors also welcomed the deal to avoid a US debt default. Nasdaq surged to a 13-month intraday high and posted its sixth-straight week of gains. For the week, the S&P 500 rose 1.82%, the Dow added 2.02% and the Nasdaq gained 2.04%.

Treasuries Yields rose after data showed employment in the US rose more than expected. But a softer wage growth helped yields climb down from the day's highs. View was that Fed could afford to pause interest rate hikes later this month. View also was that Fed's rate hikes are slowing the labour market slowly and not rapidly as was expected. Yields were sharply down for the week. Largest fall in two and a half months.

US Dollar rose Friday but declined for the week. The US unit rose on Friday as non-farm payroll data showed employment numbers rose higher than expected. The market continued to debate if the Fed could afford to skip a rate hike later this month. Some Fed officials had guided for a pause but the payroll numbers could make it tough for the Fed to pause, some traders believe.

Corporate Bonds

Secondary Market

Yields were steady on lack of fresh cues and trade remained lackluster as market await RBI's Monetary Policy meeting and its decision next week.

Outlook For This Week

Markets will await the outcome of the RBI's MPC meeting. The central bank is expected to hold rates but find language for the stance that may sound hawkish. The RBI could want to dash the market's hopes of a rate cut. Stocks could continue to rise. Yields may stay steady. The rupee may rise,benefiting from a risk-on sentiment.

In Other news

• Massive train tragedy in Odisha leaves 233 dead, 900 injured
• India May total GST mop-up 1.571 trillion rupees vs 1.870 trillion.
• India Jan-Mar GDP growth 6.1% vs 4.0% year ago.
• SEBI introduces new steps to increase liquidity in the corporate bond market.
• Government asks industry to cut edible oils MRP by Rs 8-12 per litre as global prices drop.
• M&M launches the Swaraj platform for lightweight tractors.
• Go First plans to restart operations with 26 planes, 152 daily flights, and submit the plan to DGCA.
• Divest plan of IDBI Bank proceeding well, says divestment secretary.
• Drug regulator looks to limit alcohol content in medicines
• The US Senate passes a bill to raise the debt ceiling, preventing the first-ever default.
• The US labour market is still tight as weekly jobless claims edge up.
• Australian PM Albanese stresses the need for diplomacy, guardrails in dealing with China.
• Blinken says no Ukraine cease-fire without a peace deal that includes Russia's withdrawal

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