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Indian equity benchmarks ended choppy session flat on Wednesday as IT stocks fell most on profit taking after recent strong gains. Today, markets are likely to get flat to positive start tracking overnight gains on Wall Street, and as the market participants awaits the Reserve Bank of India's (RBI) monetary policy outcome later in the day. Most market participants expect that the RBI MPC will hold the key interest rate steady at 6.5 per cent. There are expectations that the rates to remain unchanged until at least July as India's CPI remain closer to the upper price band of 6 per cent. Some support will come as responding to concerns about inflation, Union Finance Minister Nirmala Sitharaman said that CPI inflation was within the tolerability threshold of 4 per cent (+/-2%). She also said India's debt-to-GDP ratio is well below other emerging markets. Traders may take note of a private report that India is close to finalizing a first-of-its-kind trade deal that could see a small group of European nations invest as much as $100 billion over 15 years in exchange for easier trade access to the world’s most populous nation. However, higher US bonds yields may restrict gains in the markets as comments from Federal Reserve officials reaffirmed expectations that the central bank may not cut rates soon. Surge in oil prices in early deals after Israel rejected a ceasefire offer from Hamas, as talks continued to try to end the Gaza conflict and wider Middle East tensions that have kept the market on edge since October, may dampen sentiments. Also, foreign fund outflows likely to dent sentiments in domestic markets. Foreign institutional investors (FIIs) net sold shares worth Rs 1,691.02 crore on February 7, provisional data from the NSE showed. Meanwhile, China has said that it will retain the anti-dumping duties on imports of o-chloro-p-nitroaniline originating in India for another five years, starting from February 13. Rate-sensitive stocks in real-estate, banks, financials and auto pockets will be in focus. Investors will also react to Q3 earnings of Tata Consumer, Lupin, Cummins and Apollo Tyres, among others. 

The US markets ended higher on Wednesday as strong earnings offset jitters related to U.S. regional banks and China's markets. Asian markets are trading mixed on Thursday as investors look toward China’s inflation figures and there are expectations of 0.5 percent fall year-on-year.

Back home, in a highly volatile session, Indian equity benchmarks erased initial gains and ended flat on Wednesday as investors stayed on the sidelines ahead of Reserve Bank of India’s (RBI) interest rate decision, which is scheduled for Thursday. Markets opened on a positive note and consolidated during the day, as traders took some support with the provisional data from the NSE showing that foreign institutional investors (FIIs) net bought shares worth Rs 92.52 crore on February 6, 2024. Some encouragement came after Finance Minister Nirmala Sitharaman said that retail inflation has come down to within the tolerance band due to steps taken by the government to check price rise in essential commodities, especially in perishable commodities. Some support also came with Moody's Investors Service stating that growth in Asia Pacific will decelerate in 2024 as a downshift in China's growth trajectory will spill over in the region through trade in goods and services, but India will be able to mitigate the challenge aided by robust domestic demand. However, markets erased all of their gains in afternoon deals and fell into red terrain as traders turned cautious as India's aggressive fiscal consolidation objective for next year is already being doubted, with Fitch Ratings saying it expects the target of 5.1 percent of GDP to be missed by as much as 30 basis points. Some concern also came with a private report stating that businesses' one-year-ahead inflation expectations rose sharply to 4.58 percent in December 2023 from 4.04 percent in October 2023. Markets wiped out losses to end flat amid positive cues from other Asian markets along with buying in Realty and Telecom stocks. Finally, the BSE Sensex fell 34.09 points or 0.05% to 72,152.00 and the CNX Nifty was up by 1.10 points or 0.01% to 21,930.50.