The markets were impacted by a number of factors, some of them being negative international cues, outflow of foreign funds due to a tax issue, weakening rupee, stalemate in parliament over crucial bills like land acquisition and goods and services tax (GST), and disappointing quarterly results.

However, the official data on the annual rate of wholesale price inflation (WPI) which decelerated further to its lowest in six months helped in calming nerves on the market.

The WPI stood at (-)2.65 percent for April from (-)2.33 percent for the month before, this data should provide more room for the Reserve Bank of India (RBI) to ease its monetary policy stance.

“As far as domestic factor is concerned in the near-term, risk is to understand the extent of further earnings downgrade. FY16 earnings continued to be high at more than 20 percent,” said Vinod Nair, head for fundamental research with Geojit BNP Paribas Financial Services.

“The government’s spend is likely to increase in the medium-term. India’s economy will be better in the medium-term led by real incomes and higher government spending. Hence the big question is timing which is always ‘never know’, thus we recommend to be structurally positive from a wait-and-watch strategy.”

Nair observed that the latest CPI (consumer price index) trajectory provided a scope to cut rate by the next RBI (Reserve Bank of India) meet on June 2.