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Indian markets snapped a three-day losing streak to settle higher by over half a per cent on Friday following buying in IT, financials, and metal shares on easing inflation worries. Today, the start of the new week is likely to be flat-to-positive amid gains in Asian peers. Some support will come with a private report that industry leaders have expressed confidence in India’s economy being resilient in the face of global headwinds in uncertainties, with the Confederation of Indian Industries’ Business Confidence Index achieving its highest reading in two years for the October-December quarter. According to a statement by the industry body, “Reflecting the optimism around India being in a ‘sweet spot’ despite the rising global uncertainties, the latest CII Business Confidence Index rebounded to its highest reading in almost two years of 67.6 in the October-December quarter from 62.2 in the previous quarter. Traders may take note of Governor Shaktikanta Das’ statement that headline retail inflation may have fallen within the Reserve Bank of India’s (RBI’s) tolerance band, but core inflation remains uncomfortably high and the central bank’s focus is on the metric. However, there may be some cautiousness as foreign investors offloaded around Rs 15,000 crore worth of Indian equities in the first two weeks of January amid risks of Covid in some parts of the world and recession worries in the US. Traders may be concerned with a private report that India’s growth is likely to disappoint at 4.5% in 2023 due to global spillovers, prompting 75 basis point of rate cuts in second half of 2023. Besides, the Reserve Bank said India's forex reserves declined by $1.268 billion to $561.583 billion for the week ended January 6. IT stocks will be in focus with a private report that India's IT services heavyweights delivered between 14-20 per cent on-year growth in topline for December quarter, as they raised guard on global uncertainties and choppy verticals, but remained hopeful that costs as well as business considerations will drive tech demand. There will be some buzz in auto industry stocks as wholesales data released by the Society of Indian Automobile Manufacturers (SIAM) showed that passenger vehicles saw their highest-ever sales of 3.8 million units during the calendar year of 2022. This is around 400,000 units higher than the last peak in 2018. Banking stocks will be in limelight as RBI data showed that credit growth of scheduled commercial banks tapered off in the second fortnight of December, which fell to 14.9 per cent year-on-year (YoY) from 17.4 per cent a fortnight ago. There will be some earnings announcements too to keep the markets buzzing.

The US markets ended higher on Friday with shares of JPMorgan Chase and other banks rising following their quarterly results, which kicked off the earnings season. Asian markets are trading mostly in green on Monday as investors waited nervously to see if the Bank of Japan (BOJ) will defend its super-sized stimulus policy at a pivotal meeting this week.

Back home, Indian equity benchmarks bounced back on Friday after a three-day decline following buying in index major Tata Steel, Indusind Bank and Infosys amid a firm trend in global equities. Markets made a cautious start and traded under pressure in the first half of the trading session as traders were concerned with a private report stating that the Centre as well as state governments are likely to budget for higher market borrowings next fiscal even though the Union Budget may peg a lower-than-expected fiscal deficit at 5.8 per cent of GDP. Some cautiousness also came as provisional data available on the NSE showed that foreign institutional investors (FII) have net sold shares worth Rs 1,662.63 crore on January 12, 2023. However, domestic indices erased all of their losses and turned positive in afternoon deals as traders were getting encouragement with data showing that India’s retail inflation or CPI fell to a one-year low of 5.72% in December, owing to a sharp deflation (-15.08%) in vegetables and easing price pressures in the broader food and beverages category. Some optimism also came with data showing that India's industrial growth, as per the Index of Industrial Production (IIP), accelerated to 7.1 percent in November 2022. IIP growth returned to positive territory in November after it had contracted by 4 percent in October - the industry's worst performance in 26 months. Traders also took a note of Union Minister for Commerce and Industry, Consumer Affairs, Food and Public Distribution and Textiles, Piyush Goyal’s statement that the India US Trade Policy Forum (TPF) has resulted into a smoother, friendly and trusted business environment for businesses from both sides to expand their trade and investment. Finally, the BSE Sensex rose 303.15 points or 0.51% to 60,261.18 and the CNX Nifty was up by 98.40 points or 0.55% to 17,956.60.