Indian equity benchmarks ended with marginal gains in the volatile session on Thursday as investors looked ahead to key economic indicators like retail inflation and factory production for directional cues. Markets made a positive start and stayed within a narrow range for most part of the trading session as traders took support with Finance Minister Nirmala Sitharaman's statement that India will become the third largest economy by 2027-28, with a GDP of over $5 trillion. Some optimism also came with PHDCCI report stating that India's economy is likely to surpass $4 trillion in 2024-25 and further escalate to $5 trillion by 2026-27. The industry chamber also expects the RBI to cut the repo rate by 100 basis points in a calibrated manner by the end of 2024. However, markets erased initial gains in late afternoon deals, as provisional data from the NSE showed that foreign institutional investors (FIIs) sold shares worth Rs 1,721.35 crore on January 10. Some concerns also came with the central bank Governor Shaktikanta Das' statement that Indian financial institutions must guard against relying on algorithms and artificial intelligence to assess customers for loans. Das said Model based, algorithm lending can lead to a potential crisis. But, markets staged recovery and managed to post marginal gains, as some optimism remained among traders as State Bank of India chairman Dinesh Kumar Khara termed the 7.3 per cent growth estimate for the country for FY24 as a very positive development. Traders took note of Foreign Secretary Vinay Kwatra's statement that India and the United Arab Emirates have signed a deal to explore the establishment of grid connectivity between the two countries. He said one of the pacts is on renewable energy, which also includes green hydrogen and solar. Finally, the BSE Sensex rose 63.47 points or 0.09% to 71,721.18 and the CNX Nifty was up by 28.50 points or 0.13% to 21,647.20.

The US markets ended flat on Thursday after the Labor Department released a report showing consumer prices in the U.S. rose by slightly more than expected in the month of December. The Labor Department said its consumer price index climbed by 0.3 percent in December after inching up by 0.1 percent in November. Street had expected consumer prices to rise by 0.2 percent. The report said energy prices also rose by 0.4 percent, as increases in prices for electricity and gasoline more than offset a decrease in prices for natural gas, while prices for food edged up by 0.2 percent. Excluding food and energy prices, core consumer prices still climbed by 0.3 percent in December, matching the increase seen in November as well as economist estimates. The core price growth reflected the increase in shelter prices as well as higher prices for motor vehicle insurance and medical care. Meanwhile, prices for household furnishings and operations and personal care were among those that decreased over the month. The report also showed the annual rate of consumer price growth accelerated to 3.4 percent in December from 3.1 percent in November. The annual rate of growth was expected to tick up to 3.2 percent. On the sectoral front, despite the recovery by the broader markets, interest rate-sensitive utilities stocks continued to see substantial weakness, with the Dow Jones Utility Average tumbling by 2.2 percent. Natural gas stocks also saw considerable weakness amid a decrease by the price of the commodity, dragging the NYSE Arca Natural Gas Index down by 1.4 percent. Telecom, biotechnology and banking stocks also moved to the downside on the day, while some strength emerged among software and oil stocks.

Crude oil futures ended higher Thursday amid rising tensions in the Middle East. According to reports, Iran seized a tanker with Iraqi crude marked for delivery to Turkey on Thursday. The Navy of Iran's Army has announced the seizure of an American oil tanker in the Gulf of Oman with a judicial order. Besides, signs of an escalating conflict in the Middle East after another Israeli strike in Rafah, supported oil prices. Israel bombarded the southern Gaza Strip overnight, as U.S. Secretary of State Antony Blinken prepared to travel to Egypt for more talks aimed at containing Israel's war against Hamas. Benchmark crude oil futures for February delivery rose by $0.65 or 0.91 percent to settle at $72.02 a barrel on the New York Mercantile Exchange. Brent crude for March delivery gained $0.61 or 0.79 percent to settle at $77.41 a barrel on London's Intercontinental Exchange. 

Snapping six-day gaining streak, Indian rupee ended flat against the dollar on Thursday as investors looked ahead to key economic indicators like retail inflation and factory production for directional cues.  Some concern also came as provisional data from the NSE showed that foreign institutional investors (FIIs) sold shares worth Rs 1,721.35 crore on January 10. However, traders took some support with Finance Minister Nirmala Sitharaman's statement that India will become the third largest economy by 2027-28, with a GDP of over $5 trillion. On the global front, dollar edged lower on Thursday as traders waited for U.S. inflation data to confirm whether bets on as many as five Fed interest rate cuts this year were justified, while weak Japanese wages data sent the yen to a six-week low against the euro. Finally, the rupee ended unchanged from its previous close of 83.03 on Wednesday.

The FIIs as per Thursday's data were net sellers in both equity and debt segments. In equity segment, the gross buying was of Rs 9653.90 crore against gross selling of Rs 11304.68 crore, while in the debt segment, the gross purchase was of Rs 1035.65 crore with gross sales of Rs 1229.72 crore. Besides, in the hybrid segment, the gross buying was of Rs 30.30 crore against gross selling of Rs 19.87 crore.

The US markets ended mostly higher on Thursday after the CPI number came slightly hotter than expected. Asian markets are trading mixed on Friday as investors awaited a slew of economic data out of China, including inflation and trade numbers for December. Indian markets ended marginally higher on Thursday to extend gains for a third day running. Today, markets are likely to get slightly positive start tracking overnight gains on Wall Street. Some support will come with a data showing that India's net direct tax collection increased 19 per cent on an annual basis to Rs 14.70 lakh crore till January 11. The data also revealed that the tax collection has reached 81 per cent of full-year target. The government has budgeted to collect Rs 18.23 lakh crore from direct taxes (personal income tax and corporate tax), 9.75 per cent higher than Rs 16.61 lakh crore mopped up last fiscal. Traders may take note of Finance Minister Nirmala Sitharaman's statement that the much-awaited direct listing of stocks at the International Financial Services Centre (IFSC) in GIFT City would happen soon to enable Indian companies to access global funds easily. However, investors likely to remain on sidelines ahead of India's Consumer Price Index (CPI) inflation and Index of Industrial Production (IIP) data to be out later in the day for more directional cues. There are expectations that India's headline retail inflation rate likely rose to a four-month high in December, edging closer to the upper-bound of the Reserve Bank of India's (RBI) tolerance range of 2-6 percent. Foreign fund outflows likely to dent sentiments. Provisional data from the NSE showed that foreign institutional investors (FIIs) sold shares worth Rs 865 crore on January 11. Some cautiousness may come as India's outward foreign direct investment (FDI) commitments fell sharply to $2.25 billion in December 2023, compared to over $4.12 billion in December 2022. Sequentially, they were also down from $4.0 billion in November 2023, according to Reserve Bank of India (RBI) data. IT stocks will be in focus after Infosys and TCS Q3 numbers. Infosys cut its revenue growth guidance for the third straight quarter, after reporting a 7.3 per cent dip in Q3 net profit. TCS reported a 2 per cent rise in net profit. Meanwhile, investors will keep eye on Q3 earnings of HCL Technologies, Wipro, HDFC Life Insurance, Anand Rathi Wealth, Just Dial, JTL Industries, Tata Metaliks, Den Networks.

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

Nifty Top volumes

• Reliance Industries is planning to set up India's first and world-class carbon fibre facility at Hazira in Gujarat.
• TCS has reported 1.97% rise in consolidated net profit at Rs 11,097 crore for Q3FY24 as compared to Rs 10,883 crore for the same quarter in the previous year.
• State Bank of India has signed MoU with the Rural Development Ministry to facilitate enterprise financing for rural self-help groups.
• HDFC Asset Management Company has reported 32.17% rise in consolidated net profit at Rs 487.92 crore for Q3FY24 as compared to Rs 369.16 crore for Q3FY23.