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Indian markets ended lower on Friday amid rising crude oil prices, driven by supply concerns, and a strengthening dollar index. Today, markets are likely to get gap-down opening after a better-than-expected payrolls report in the US drove Wall Street indices lower on Friday and Treasury yields higher. Domestically, investors will be eyeing December inflation figures to be released later in the day. Foreign fund outflows likely to dent domestic sentiments. FIIs sold shares worth Rs 2,254.69 crore on January 10. Foreign investors have withdrawn Rs 22,194 crore from Indian equities this month, driven by expectations of a weak earnings season, a steady rise in the US dollar, and concerns over tariff war during Donald Trump's presidency. Traders will be concerned as IMF Managing Director Kristalina Georgieva has said the Indian economy is expected to be a little weaker in 2025 despite steady global growth. Georgieva also said she expects quite a lot of uncertainty in the world this year mainly around the trade policy of the US. Besides, the Reserve Bank of India said India's forex reserves dropped by $5.693 billion to $634.585 billion in the week ended January 3. In the previous reporting week, the overall kitty had declined by $4.112 billion to $640.279 billion. However, some support may come later in the day as data released by the National Statistics Office (NSO) showed growth in India’s Index of Industrial Production (IIP) surged to a six-month high of 5.2 per cent in November 2024 from 3.7 per cent in the previous month, aided by a low base. Data showed that the manufacturing sector (5.8 per cent) led the revival in industrial production during the month, followed by electricity (4.4 per cent) and mining (1.9 per cent). There will be some buzz in coal industry stocks with a private report that India's coal import rose by two per cent to 182.02 million tonnes (MT) in the April-November period of the current fiscal year. The country's coal import was at 178.17 MT in the year-ago period. Metal stocks will be in focus as CRISIL’s Market Intelligence and Analytics report said India will continue to outpace other major steel-consuming economies in calendar year 2025 with a demand growth of 8-9 per cent. There will be some reaction in auto stocks as Federation of Automobile Dealers Associations (Fada) said the luxury electric vehicle (EV) market grew by a modest 6.7 per cent in 2024, with most companies registering decline in sales. Overall, electric passenger vehicle retail sales in India grew by nearly 20 per cent to 99,165 units. Insurance industry stocks will be in limelight as the new business premium (NBP) of life insurance companies dropped 21.7 per cent year-on-year (Y-o-Y) to Rs 30,218.71 crore in December 2024 on the back of a steep fall in business. Moreover, investors will keep close eye in the earning of the companies for more directional cues. HCL Technologies, Delta Corp, Angel One, Anand Rathi, Den Networks and Himadri Speciality Chemical among others will release their Q3 results. Meanwhile, Standard Glass IPO will list on the bourses today.

The US markets ended lower on Friday as strong jobs data rattled investor sentiments. Asian markets are trading in red on Monday with Friday's robust US jobs report dampening hopes for early interest rate cuts by the Federal Reserve.

Back home, Indian equity benchmarks ended the volatile day of trade in red terrain on Friday amid weak global cues coupled with rising US dollar and bond yields. Sentiments remained dampened on account of continues outflow of foreign capital from Indian markets and fall in Indian rupee against the US dollar. Finally, the BSE Sensex fell 241.30 points or 0.31% to 77,378.91, and the CNX Nifty was down by 95.00 points or 0.40% to 23,431.50.   

Some of the important factors for the markets:

Traders watch for macro-economic data: Traders avoided to take long position ahead of India’s Consumer price inflation (CPI) data. There were expectations that CPI inflation likely to moderate to 5% in December from 5.5% in November. Traders were also stayed away from risky assets ahead of Index of Industrial Production (IIP) data for the month of November to be released later in the day. Factory output growth touched 3.5% in October on the back of higher production of consumer durables and garments.

IT stocks surged after TCS optimistic management commentary: The management of TCS is expecting the current calendar year to be better than 2024. The company reported lower-than-expected US Dollar revenue in Q3, while its net profit and margins grew in-line with expectations.

Rising US bond yields, dollar: Strong US macro data and dwindling expectations of a large rate decrease by the US Fed this year have caused US benchmark 10-year bond rates and the dollar to rise. Today, US Treasury rates were close to eight-month highs. Since high bond yields and a strong currency cause foreign capital to flee emerging markets like India, this has been a huge drawback.

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