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Indian markets ended lower on Thursday after a two-day rally, mirroring a weak trend overseas and a weak rupee and foreign fund outflows also weighed on sentiment. Today, markets are likely to make positive start tracking gains in other Asian counterparts. Foreign fund inflows likely to aid domestic sentiments. Foreign institutional investors (FII) bought shares worth Rs 399.98 crore on January 19, as per provisional data available on the NSE. Some support will come as the Reserve Bank of India’s (RBI’s) January 2023 Bulletin stated that lead indicators suggest that domestic current account deficit (CAD) is likely to reduce in 2023, while macro-economic stability has received a boost from inflation being brought back to the official tolerance band. Traders may take note of a private report that the Indian government is likely to set a conservative target for the funds it can raise through the disinvestment of state enterprises in fiscal 2024 after mop-up fell short this year, Meanwhile, the union finance ministry has asked banks to achieve targets given under the flagship financial inclusion and social security schemes for the current financial year. There will be some buzz in the sugar industry stocks as Food Secretary Sanjeev Chopra said the government will take a decision next month on increasing the sugar export quota from current 60 lakh tonnes after assessing the domestic production and internal demand. Banking stocks will be in focus as Moody's Investors Service in its latest report on the banking sector in emerging markets stated that the asset quality of Indian banks and those in Southeast Asian countries will be stable in 2023. There will be some reaction in aviation industry stocks as aviation regulator DGCA said domestic air traffic continued to register growth as passengers carried by domestic airlines during January-December 2022 were 12.32 crore as against 8.38 crore during the corresponding period of previous year thereby registering annual growth of 47.05 per cent and monthly growth of 13.69 per cent. Automobile stocks will be in limelight after the government said that from April 1, all vehicles owned by central and state governments, including buses owned by transport corporations and public sector undertakings that are older than 15 years will be de-registered and scrapped. Traders will also be eyeing some important earnings announcement including that of Reliance Industries.

The US markets ended lower on Thursday as investors grew increasingly concerned the Federal Reserve will keep raising rates despite signs of slowing inflation. Asian markets are trading mostly in green on Friday as investors digested Japan’s inflation data. The nationwide core consumer price index rose 4% in December on an annualized basis, the fastest pace since 1981.

Back home, Indian equity benchmarks ended lower on Thursday after a two-day rally, dragged by losses in Utilities, Power and FMCG stocks. Key gauges made a negative start and stayed in red for whole day, as traders were cautious with exchange data showing that foreign Institutional Investors (FIIs) were net sellers in the capital markets on Wednesday as they offloaded shares worth Rs 319.23 crore. Some pessimism also came as IMF's Gita Gopinath said that the global economy is facing a unique situation due to unprecedented level of high inflation and that is causing tension between monetary and fiscal policies. However, key indices managed to trim some losses in afternoon deals, as traders found some solace with a private report stating that India is likely to become a $26-trillion economy in 100th year of its Independence in 2047 with per capita GDP growing six times from current level to over $15,000 during the period. Some support also came as India has reiterated its position as a resilient economy with a strong leadership providing stable policy to the global investors at the World Economic Forum (WEF) at Davos. India’s focus areas at WEF this year are investment opportunities, infrastructural landscape and its inclusive & sustainable growth story. But, markets failed to hold recovery and ended in red as global mood turned sour after weaker-than-expected US economic data. Traders overlooked Union Minister Ashwini Vaishnaw’s statement that India took a very pragmatic approach in dealing with the humanitarian and economic crises triggered by the Covid-19 pandemic and that has ensured moderate inflation and high growth in the country. Finally, the BSE Sensex fell 187.31 points or 0.31% to 60,858.43 and the CNX Nifty was down by 57.50 points or 0.32% to 18,107.85.

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