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Indian equity benchmarks indices are likely to start Friday’s session in positive territory ahead of the Reserve Bank of India's (RBI's) Monetary Policy Committee's (MPC's) decision on interest rates after two days of discussions, along with commentary on the state of the economy and projections for GDP growth and inflation outlook. This will be the first MPC decision to be announced by the new central bank Governor, Sanjay Malhotra. There are expectations that the RBI may cut the benchmark repo rate by 25 basis points to 6.25 per cent.

Some of the key factors to be watched:

Indian govt bond yields decline: Indian government bond yields ended marginally lower on Thursday, a day ahead of the central bank's monetary policy decision where it is widely expected to cut interest rates.

Industry should take risks, create jobs: Finance Secretary Tuhin Kanta Pandey has asked businesses to take risks, build new factories, and create jobs. The Budget measures will help give push to economic growth amidst the global headwinds, he said, adding that India will not only remain the fastest growing economy in the world but also make the pace faster.

Banking stocks will be in focus: The finance ministry said the performance of public sector banks (PSBs) indicates that they are adequately capitalised and well poised to meet the credit demands of all sectors of the economy, with a special thrust on agriculture, micro, small and medium enterprises (MSMEs), and the infrastructure sector.

FMCG stocks will be in limelight: A private report noted that fast-moving consumer goods (FMCG) posted a double-digit growth of 10.6 per cent in the December quarter - its best in a year. In the same period last year, the sector recorded a growth of 6.5 per cent. 

Stocks of leather sector will be in focus: The Council for Leather Exports (CLE) has set a target of $47 billion by 2030, out of which $13.7 bn is for the export sector.

On the global front: The US markets ended mostly higher on Thursday after a choppy trading session, as investors sifted through earnings reports and awaited Amazon's results after the bell and a key jobs report on Friday. Asian markets are trading mixed on Friday as traders awaited US jobs data that will help illuminate the path ahead for interest rates.

Back home, Indian equity benchmarks extended their losses for the second consecutive session on Thursday, as investors waited for the Reserve Bank of India’s rate decision on Friday. Finally, the BSE Sensex fell 213.12 points or 0.27% to 78,058.16, and the CNX Nifty was down by 92.95 points or 0.39% to 23,603.35.

Some of the important factors in trade:

All eyes on RBI meeting amid rate cut expectations: Investors remained on sidelines ahead of the Reserve Bank of India’s (RBI) monetary policy Committee’s (MPC) decision which is going to be announced on February 7. The RBI began deliberations on its monetary policy on Wednesday, with market expectations pointing to a 25-basis point rate cut--the first in five years. 

FIIs selling resumed: Traders were anxious as exchange data showed that foreign institutional investors (FIIs) offloaded equities worth Rs 1,682.83 crore in the capital markets on a net basis on Wednesday. 

Rupee plunged to fresh record low: Indian rupee depreciated further to hit a new record low of 87.57 (provisional) against the US dollar on Thursday, amid weak domestic markets and importer demand for dollars. 

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