Indian markets made a nervous start to the week as the benchmarks plummeted over half a percent, as investors took profits off the table ahead of IIP and inflation data due later in the day. Sentiments remained dismal, as the State Bank of India expressed concern that demonetisation, announced in November 2016, may continue to result in slowing down of the economy, and adversely affect its business. It said that the long-term impact of this move on the Indian economy and the banking sector is uncertain. Besides, weak global cues coupled with depreciation in Indian rupee against the dollar too weighed down sentiments. The frontline indices shaved off over half percent and breached 31,100 (Sensex) and 9,650 (Nifty) levels on the downside. The broader markets too mirrored their larger peers and drifted to lower levels to snap the day on a pessimistic note. Some concerns also came after government of Maharashtra on Sunday announced a loan waiver for farmers and decided to form a committee to decide the criteria of debt relief. The loan waiver of around Rs 30,000 crore will affect the state fiscal and 'impact the credit discipline' among borrowers. Further, market participants failed to get any sense of relief with the report that the southwest monsoon is making a steady advance into Maharashtra & West Bengal and the weatherman has predicted a good week ahead. India Meteorological Department Director General KJ Ramesh said monsoon is in an active phase and has reached Mumbai, Mahabaleshwar (in Maharashtra) and several parts of the Konkan region, apart from Bijapur district in north Karnataka. Finally, the BSE Sensex declined 166.36 points or 0.53% to 31095.70, while the CNX Nifty was down by 51.85 points or 0.54% to 9,616.40.

The US markets closed lower on Monday, for the second straight session of firm losses in technology shares, but the shift away from tech appears to be feeding recently unloved sectors and smaller-cap stocks. US inflation expectations tumbled last month, with one key measure hitting its lowest level since early 2016, according to a Federal Reserve Bank of New York survey that could amplify the central bank's concern over a broad slump in prices. The survey of consumer expectations, an increasingly valuable gauge for the Fed, showed that median three-year-ahead inflation expectations fell to 2.47 percent last month, from 2.91 percent in April. That brought the measure to a 16-month low after it had hovered near a record high the last six months. On the economy front, the federal government ran a budget deficit of $88 billion in May, up from $53 billion in the same month a year ago. Spending was $329 billion in the month, compared to $277 billion in May 2016. Receipts for May were $240 billion, up from $225 billion a year ago. The Treasury said that the monthly deficit would have been much narrower if not for one additional Wednesday in May 2017 and a shift of timing in benefit payments. The Dow Jones Industrial Average lost 36.3 points or 0.17 percent to 21,235.67, Nasdaq was down 32.45 points or 0.52 percent to 6,175.47, while S&P 500 edged lower by 2.38 points or 0.10 percent to 2,429.39.

Crude oil futures extended their gains on Monday, trimming some of last week's losses despite further signs of robust U.S. production. Prices got a boost after, after Saudi Arabia and Russia attempted to quell investor fears concerning the glut in supply, insisting that declines in inventories will accelerate over the near term. Meanwhile, Energy Information Administration (EIA) in its latest monthly release said that oil production from the biggest US shale fields will rise by 127,000 barrels a day to 5.475 million barrels a day in July from June. Surging US production has offset production quotas from OPEC and Russia this year. Benchmark crude oil futures for July delivery ended higher by $0.25 or 0.6 percent to $46.08 on the New York Mercantile Exchange. In London, Brent crude for July delivery ended up by $ 0.34 to $48.49 on the ICE.

Indian rupee depreciated against the US dollar on Monday, due to fresh demand for the American currency from banks and importers. Investors' maintained cautious approach ahead of key macro data - index of industrial production (IIP) for April and consumer price index-based inflation for May scheduled to be released later in the day. Sentiments also remained dampened, as the State Bank of India has expressed concern that demonetisation, announced in November 2016, may continue to result in slowing down of the economy, and adversely affect its business. Besides, dollar strengthened against other currencies overseas along with losses in the domestic equity market too weighed on the rupee sentiments. Finally, the rupee ended at 64.44, 19 paise weaker from its previous close of 64.25 on Friday.

The FIIs as per Monday's data were net sellers in equity segment, while they were net buyers in debt segment. In equity segment, the gross buying was of Rs 4044.54 crore against gross selling of Rs 4113.59 crore, while in the debt segment, the gross purchase was of Rs 4965.25 crore with gross sales of Rs 1456.21 crore.

The US markets despite coming off the day's low ended modestly in red in the last session, tech-heavy Nasdaq continued underperforming its counterparts, pulling back further off the record closing high set last week. The overall weakness was partly contributed by profit taking, with traders cashing in on some of the recent strength in the markets. The Asian markets have once again made a mixed start, though some of the indices are recovering, as selloff in technology shares showed signs of easing. The Indian markets after a weak start remained below the neutral line throughout the day in last session and ended with cut of around half a percent. Today, the start is likely to be in green on signs of recovery in the global markets and on getting double dose of good macro data. India's industrial production grew by 3.1 percent in April due to good performance of electricity, mining and manufacturing sectors, while retail inflation fell to a record low of 2.18 percent in May, as prices of kitchen staples like vegetables and pulses declined sharply. However, there will be some cautiousness from the global front as the US Federal Reserve's two-day rate-setting meeting kicks off later today. While the Fed is widely expected to hike the policy rate this time, markets will also keenly watch its communication on US economic growth and future rate hike trajectory.  There will be buzz in the banking sector stocks, as the government and the RBI on Monday indicated that they will step up efforts to clean up bank books that are saddled with record non-performing assets (NPAs), including through the National Infrastructure Investment Fund (NIIF). Meanwhile, Finance Minister Arun Jaitley has said the union government will not partake in state's fiscal leverage in waiving farm loans and made it clear that the cost has to be borne by them.

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

Nifty Top volumes

• YES Bank has entered into partnership with Entrepreneurship education and incubator, Entrepreneurship Development Institute of India to fund start-ups supported by the institution.
• SBI is all set to launch a planned share sale of as much as $2.3 billion as early as this week to raise funds from institutional investors.
• HDFC is planning to raise Rs 1,500 crore through issuance of bonds on a private placement basis.
• Tata Motors' subsidiary -- Jaguar Land Rover has invested $25 million in US ride-hailing company Lyft as part of a partnership that includes development and testing of autonomous cars.