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Indian markets ended a volatile session lower on Friday, extending losses to a fourth straight day. Weakness across most sectors, with IT, financial and metal stocks being the worst hit, pulled the headline indices lower. Today, the markets are likely to continue their sluggish trend with gap-down opening tracking weak global cues. Continued selling by foreign institutional investors (FIIs) is likely to weight on domestic markets, as per provisional data available on the NSE, FIIs net sold shares worth Rs 3,148.58 crore. There will be some cautiousness as former RBI Governor Raghuram Rajan said the Indian economy has some bright spots and a number of very dark stains and the government should target its spending carefully so that there are no huge deficits. Rajan also said the government needs to do more to prevent a K-shaped recovery of the economy hit by the coronavirus pandemic. However, some support may come later in the day as DGFT official Amiya Chandra said India has set up a target of $500 billion exports for the 2022-23 fiscal, contending that the COVID-19 pandemic has taught the country to reimagine world trade. In December 2021, exports stood at $37.8 billion, the highest-ever for any month. Besides, the Services Export Promotion Council (SEPC) looks to set an export target of $300 billion for 2022-23 as it expects resumption of regular international travels and other business activities in the coming time. Gem and jewellery industry stocks will be in focus as the Gem and Jewellery Export Promotion Council said India's gem and jewellery exports during December 2021 grew 29.49 per cent to $3,040.92 million (Rs 22,914.6 crore) as compared to $2,348.44 million (Rs 16,712.46 crore) in December 2019 -- the pre-pandemic year. There will be some reaction in infrastructure industry stocks with report that as many as 445 infrastructure projects, each entailing investment of Rs 150 crore or more, have been hit by cost overruns totalling more than Rs 4.4 lakh crore. The Ministry of Statistics and Programme Implementation monitors infrastructure projects of Rs 150 crore and above. Aviation industry stocks will be in limelight as Icra in its report stated that hit by the third wave of the pandemic that led to massive cancellations of domestic flights and extension of the ban on scheduled international flights till the end of the next month, the airports are set to see a 10-percentage-point fall in their revenue recovery this fiscal to 52 per cent of the pre-pandemic level. Investors awaited more of quarterly earnings from India Inc for cues.

The US markets ended lower on Friday with Nasdaq posting its biggest weekly loss since March 2020 amid inflation concerns and fears of monetary tightening. Asian markets are trading in red on Monday with the Federal Reserve expected to confirm it will soon start draining the massive liquidity that has fuelled the huge gains in growth stocks in recent years.

Back home, Indian equity benchmarks closed over half a percent lower but off Friday's intra-day lows, extending the sell-off for the fourth day. The benchmark indices opened on a sharply negative note in tandem with the weak sentiment across the global markets. Traders remained cautious as the government data showed that retail inflation for farm and rural workers rose to 4.78 percent and 5.03 percent respectively in December 2021, mainly due to higher price of certain food items. Some concern also came with domestic rating agency ICRA’s report stated that the recent surge in fresh Covid infections as well as subsequent localised lockdowns emanating from Omicron spread are likely to shave off around 100 bps of growth in toll collections in fiscal year 2021-22. However, the key indices made a sharp recovery in afternoon trade, as traders took some solace after the payroll data of the Employees’ Provident Fund Organization (EPFO) showed at least 8,27, 979 people joined formal work for the first time in November, showing a marginal uptick in the formal sector job creation over the month-ago period. Adding some optimism, with a view to boost economic activities slowed down due to the impact of COVID-19, the Finance Ministry has relaxed spending norms for the fourth quarter in a bid to spur capital expenditure. But, key gauges failed to hold recovery and ended lower, as some anxiety remained among traders with a private report stated that institutional investments in real estate fell 81 per cent at $670 million during the December quarter because of lower inflow in office assets. Besides, persistent selling by FIIs weighted down on the markets. As per provisional data available on NSE, Foreign institutional investors (FIIs) sold shares worth Rs 4,679.84 crore on January 20. Finally, the BSE Sensex fell 427.44 points or 0.72% to 59,037.18 and the CNX Nifty was down by 139.85 points or 0.79% to 17,617.15

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