Indian equity benchmarks ended lower for the third consecutive day on Monday, amid selling in Finance, Capital Goods, Banking and FMCG stocks. Key gauges had a weak start and selling was accentuated throughout the session, as traders remained cautious with a private report that in view of inflationary concerns, the Reserve Bank is likely to maintain the status quo on key policy rates in its next bi-monthly economic policy, which will be the first after the presentation of the Union Budget for 2022-23. Some concern also came as rating agency Moody's Investors Service said Indian economy's fiscal strength is unlikely to improve in the medium term, thus remaining a key credit challenge compared with peers, even as the FY23 budget's focus on capital expenditure will support near-term growth. The sharp fall in the market also attributed to persisting selling by the foreign institutional investors (FIIs). Foreign portfolio investors (FPIs) pulled out as much as Rs 6,834 crore from Indian markets in the first four trading sessions of February. As per depositories data, FPIs took out Rs 3,627 crore from equities, Rs 3,173 crore from the debt segment and Rs 34 crore from hybrid instruments. FIIs remained net sellers in the capital market, as they sold shares worth Rs 2,267.86 crore on Friday. Some anxiety also came with RBI data showed that the country's foreign exchange reserves declined by $4.531 billion to stand at $629.755 billion in the week ended January 28. In the previous week ended January 21, the reserves had decreased by $678 million to $634.287 billion. It touched a lifetime high of $642.453 billion in the week ended September 3, 2021. Traders overlooked Commerce and Industries Minister Piyush Goyal stating that promoting exports through subsidies has not really given the desired results, but the government's RoDTEP (Remission of Duties and Taxes on Export Products) scheme is helping grow exports which is expected to reach a record $400 billion this year. Finally, the BSE Sensex fell 1023.63 points or 1.75% to 57,621.19 and the CNX Nifty was down by 302.70 points or 1.73% to 17,213.60.

The US markets ended mostly lower on Monday as traders remained largely reluctant to build up positions as they looked ahead to the released of the inflation data and the minutes of the Federal Reserve's latest monetary policy meeting, for directional clues. Meanwhile, corporate earnings were again a source of volatility for stocks. Tyson Foods gained more than 12% after beating earnings expectations, while medical device maker Zimmer Biomet fell 9% after its report. Shares of Facebook-parent Meta fell more than 5%, continuing a post-earnings slide. The stock has now dropped 30% since the company's quarterly report last Wednesday. And shares of Netflix, still struggling after the media giant issued weak guidance in January, fell another 2%. So far 56% of S&P 500 companies have posted quarterly earnings, with 77% beating earnings estimates and 76% topping revenue expectations. However, there have been some disappointing results from high profile companies, including Meta and PayPal that have sparked major pullbacks for some stocks. Besides, Shares of Spirit Airlines jumped 17% after Frontier Airlines announced a deal to merge with its low-cost competitor. The news appeared to boost sentiment among airlines generally, with shares of United rising more than 3%. Peloton shares surged nearly 21% on reports that Amazon and Nike are lining up as possible suitors for the interactive fitness equipment maker.

Crude oil futures ended lower on Monday as signs of a progress in the US-Iran nuclear talks that could lead to removal of US sanctions on Iranian oil sales offset concerns about the tight supplies. US President Joe Biden's administration restored sanctions waivers to Iran to allow international nuclear cooperation projects, as the talks on the 2015 international nuclear deal enter the final stretch. Meanwhile, the Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, together known as OPEC+, are struggling to meet targets despite pressure from top consumers to raise production more quickly. Benchmark crude oil futures for March delivery fell $0.99 or about 1.1 percent to settle at $91.32 a barrel on the New York Mercantile Exchange. Brent crude for April delivery lost $0.58 or 0.6 percent to settle at $92.69 a barrel on London's Intercontinental Exchange.

Forex and money market will remain close on Monday, February 07, 2022, as the Maharashtra government announced a public holiday to mourn Bharat Ratna legendary singer Lata Mangeshkar's demise. The rupee had ended at 74.69 (Provisional) on Friday, stronger by 19 paise from its previous close of 74.88 on Thursday.

The FIIs as per Monday's data were net sellers in both equity and debt segment. In equity segment, the gross buying was of Rs 2718.56 crore against gross selling of Rs 7871.40 crore, while in the debt segment, the gross purchase was of Rs 535.71 crore with gross sales of Rs 1101.18 crore. Besides, in the hybrid segment, the gross buying was of Rs 1.39 crore against gross selling of Rs 31.18 crore.

The US markets ended mostly lower on Monday amid mixed corporate earnings. Asian markets are trading mostly higher on Tuesday as investors in the region continue to assess the inflation and central bank policy outlook. Indian markets began the week on a sharply negative note amid a broad-based sell-off on Monday, extending losses to a third straight session. Today, markets are likely to make cautious start amid mixed global cues. Investors may be in wait and watch mode ahead of the RBI MPC meet that is slated to begin today. There will be some cautiousness with Fitch Ratings' statement that higher fiscal deficits and lack of clarity on consolidation plans in the Budget add risks to its projection of lowering of India's debt-to-gross domestic product (GDP) ratio. However, some support may come later in the day as Minister of State for Finance Pankaj Chaudhary said India's gross domestic product (GDP) is projected to grow at 9.2 per cent to Rs 147.5 lakh crore in 2021-22. Chaudhary said the government has implemented several major reforms in recent years to boost investment and GDP growth. Meanwhile, NITI Aayog Vice Chairman Rajiv Kumar said India is witnessing increasing digitisation with people getting greater and easier access to financial services, which has led to a shift in consumers' financial behaviour from cash to e-wallets and UPI. Banking stocks will be in focus as Minister of State for Finance Bhagwat Karad said the gross bad loans of the banks have declined to a little over Rs 8 lakh crore by end of the September 2021 quarter from over Rs 9.33 lakh crore at the end of March 2019. Of this, the share of public sector banks (PSBs) in bad loans proportion has also declined 72 per cent against nearly 80 per cent. There will be some reaction in sugar stocks as the All India Sugar Trade Association (AISTA) said Indian mills have signed contracts to export 4.6 million tonnes of sugar in the 2021/22 marketing year without government subsidies. Auto stocks will be in limelight as automobile dealers' body FADA said passenger vehicle retail sales declined 10 per cent year-on-year in January 2022, as the companies continued to suffer production loss amid semiconductor shortage. Adani Wilmar, whose IPO got 17 times subscription, is scheduled to make its stock market debut on Tuesday, 8 February 2022. Investors awaited quarterly earnings from companies for further cues.

Support and Resistance: NSE (Nifty) and BSE (Sensex)

Nifty Top volumes

• Dr. Reddy's Laboratories has received the DCGI approval for the single-shot Sputnik Light vaccine for restricted use in emergency situation in India. 
• SBI has lined up six NPAs for sale to asset reconstruction companies to recover dues of nearly Rs 406 crore. 
• NTPC has commenced commercial operation of second part capacity of 74.88 MW out of 296 MW Fatehgarh Solar PV Project at Jaisalmer, Rajasthan with effect from February 5, 2022. 
• Tech Mahindra has collaborated with Yellow.ai, the world's leading next-gen TX automation platform to transform enterprise customer experiences with conversational AI.