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Indian equity benchmarks are likely to start trading session in green tracking overnight gains on Wall Street and amid foreign fund inflows. Investors will be eyeing Services PMI data to be out later in the day. Market participants will be closely watching Q3 earnings from companies like Swiggy, Zydus Life, and Cummins among others. Also, all eyes will be on RBI Governor Sanjay Malhotra as MPC meeting beginning later today.

Some of the key factors to be watched:

Foreign fund inflows: After remaining net sellers for the 23 sessions, the Foreign institutional investors (FIIs) turned net buyers on February 4, as they bought equities worth Rs 809 crore.

CPI inflation likely to ease to 4.5% in Q4 FY25: a recent report by the State Bank of India (SBI) noted that the country's retail inflation is expected to decline to 4.5% in the last quarter (January-March) of the financial year 2024-25 (FY25), while the overall average inflation for the year is likely to be at 4.8%.

Govt framing schemes under export promotion mission for exporters: The government is framing schemes for MSME exporters to provide credit at easy terms, promote alternate financing instrument through strengthening factoring services for them, and offer assistance to deal with non-tariff measures imposed by other countries.

Domestic demand to boost growth over next few years post I-T cuts in Budget: S&P Global Ratings on Tuesday said the Budget for 2025-26 will boost India's growth over the next few years via domestic demand through income tax cuts and the country will achieve the targeted 4.4 per cent fiscal deficit despite hiking I-T rebate.

Auto stocks will be in focus: A private report said India’s passenger vehicle (PV) industry is expected to witness low single-digit growth in FY25, with forecasts indicating a modest 1.5 per cent year-on-year (y-o-y) growth due to subdued demand.

On the global front: The US markets ended higher on Tuesday after last-minute negotiations resulted in one-month reprieves on President Donald Trump's 25% levies against Canada and Mexico. Asian markets are trading mostly in red on Wednesday as traders navigated their way through a US-China trade war and earnings from Wall Street’s big tech companies.

Back home, Indian equity benchmarks witnessed a strong rally and ended with gains of over one and half percent on Tuesday, as renewed buying in select heavyweight stocks sustained the upbeat sentiment throughout the session. Finally, the BSE Sensex rose 1397.07 points or 1.81% to 78,583.81, and the CNX Nifty was up by 378.20 points or 1.62% to 23,739.25.

Some of the important factors in today’s trade:

Markets cheered Trump tariff pause: Traders reacted positively to US President Donald Trump's latest decision to delay imposing planned tariffs on Mexico and Canada by a month after successful negotiations with the respective leaders, allaying fears of trade war.  

Rate cut expectations from RBI: All eyes are on the outcome of the forthcoming RBI Monetary Policy Committee (MPC) meeting. The RBI is expected to cut interest rates for the first time in nearly five years on waning concerns about stubborn inflation. 

There is no concern over rupee value: Amidst the weakening rupee, Finance Secretary Tuhin Kanta Pandey said there is no concern over rupee value and the Reserve Bank of India (RBI) is managing the volatility of the local currency. He said the Indian rupee is free-float and no control or fixed rate is applicable on the currency.

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