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Indian benchmarks buckled under selling pressure for the second straight session on Thursday as traders reduced their exposure to riskier assets after minutes from the US Federal Reserve's latest meeting indicated more rate hikes this year. Today, the markets are likely to get cautious start amid mixed global cues. Investors may remained on sidelines and avoid taking long positions ahead of kick start of earning season in coming week. Persistent selling by foreign investors likely to dent sentiments in local markets. Foreign institutional investors (FII) sold shares worth Rs 1,449.45 crore on January 5, as per provisional data available on the NSE. Traders will be concerned with a private report that India's economy is expected to grow 5.5% in the next financial year, a notch below the expected potential rate of 6%, as growth momentum in the country was slowing gradually. However, some respite may come later in the day as the commerce and industry ministry is hopeful of improvement in foreign direct investment (FDI) inflows in the coming months despite global headwinds. Some support may come as Union New and Renewable Energy Minister R K Singh said his ministry will come out with detailed guidelines and standards for making India a global hub for hydrogen manufacturing. Traders may take note of report that Israel's newly-appointed Foreign Minister Eli Cohen and his Indian counterpart S Jaishankar have discussed about ways to strengthen bilateral ties, including ways to promote Free Trade Agreement (FTA) and projects in the field of innovation, food and water security. Meanwhile, the Securities and Exchange Board of India (Sebi) has extended the relaxation to listed companies from dispatching of physical copies of financial statements till September 30, 2023. Coal industry stocks will be in focus as the dispatch of coal to different sectors was at 78.91 million tonnes (MT) in December, registering a rise of 5.28 per cent. The coal dispatch in the corresponding month of previous fiscal was 74.95 MT.

The US markets ended lower on Thursday as evidence of a tight labor market eroded hopes that the Federal Reserve could pause its rating hiking cycle anytime soon as it keeps focused on inflation. Asian markets are trading mixed on Friday as a better-than-expected reading of ADP private payrolls report showed that employers added 235,000 jobs in December, showing a strong labor market.

Back home, Indian equity benchmarks closed in the red for the second consecutive day on Thursday dragged down by banking and finance counters.  Key gauges opened positive but soon went in negative territory amid continuous foreign fund outflows. Foreign Institutional Investors (FIIs) offloaded shares worth a net Rs 2,620.89 crore on January 4, 2023, according to exchange data. Some concerns came with rating agency ICRA’s report stating that the evolving global macroeconomic headwinds could moderate growth for Indian IT services industry over the medium term. It has cited that given the Indian IT services industry generates about 60-65 per cent of revenues from the US market and 20-25 per cent from the European market, it remains susceptible to macroeconomic uncertainties and adverse regulatory changes in these key operating markets. However, in the last hour of the trade, renewed buying across Oil & Gas, FMCG and Energy stocks helped the benchmarks to pare around half of the intraday losses. Traders took some support with a report that private sector banks are expected to report healthy growth in earnings during the October–December quarter of FY23. This would be aided by robust credit growth, margin expansion, benign credit costs, and lower provisioning burden. However, operational costs may remain high due to investment in businesses. Traders took a note of Bibek Debroy’s statement, chairman of Economic Advisory Council to the Prime Minister, that India's GDP will be close to $20 trillion by 2047 and per capita income may reach $10,000 (at current value of USD). Finally, the BSE Sensex fell 304.18 points or 0.50% to 60,353.27 and the CNX Nifty was down by 50.80 points or 0.28% to 17,992.15.

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