Indian equity benchmarks ended lower with losses of around half a percent on Monday, pressured by heavy selling in IT, Realty and TECK stocks amid a mixed trend overseas. A weak rupee further weighed on sentiment. After the flat start, the benchmarks gradually drifted lower as the day progressed with investors adopting a cautious approach ahead of the India's retail inflation data for January, to be out later in the day. Sentiments remained down-beat as growth in factory output decelerated to a two-month low of 4.3 per cent in December as manufacturing dragged the overall growth in the Index of Industrial Production (IIP) even as mining and electricity production grew at a robust pace. Some cautiousness also came in as RBI data showed India's foreign exchange reserves dropped by $1.494 billion to reach $575.267 billion as of February 3, snapping a three-week rising trend.  Domestic sentiments remained pessimistic in afternoon deals, amid a private report stating that foreign investors continue to desert Indian stock markets as they pulled out over Rs 9,600 crore this month so far on costlier valuation of domestic equities compared to other emerging markets. The outflow comes following a net withdrawal of Rs 28,852 crore by Foreign Portfolio Investors (FPIs) in January. However, in the last hour of trade, indices trimmed some losses. Traders took some support with the finance ministry's statement that gross direct tax collections grew 24 per cent to Rs 15.67 trillion so far this fiscal. After adjusting for refunds, the net direct tax collection stood at Rs 12.98 trillion, a growth of 18.40 per cent. Finally, the BSE Sensex fell 250.86 points or 0.41% to 60,431.84 and the CNX Nifty was down by 85.60 points or 0.48% to 17,770.90.

The US markets ended higher on Monday as some traders looked to pick up stocks at relatively reduced levels following the weakness seen last week, which partly reflected ongoing concerns about the outlook for interest rates. However, traders looked ahead to tomorrow's closely watched report on consumer price inflation. Consumer prices are expected to show a monthly increase in January, although the annual rate of growth is expected to slow to 6.2 percent from 6.5 percent in the previous month. The inflation data could have a significant impact on the outlook for interest rates amid recent speculation the Federal Reserve may raise rates higher than currently anticipated. Software stocks showed a significant move to the upside on the day, driving the Dow Jones U.S. Software Index up by 2.4 percent. Considerable strength was also visible among tobacco stocks, as reflected by the 2.1 percent jump by the NYSE Arca Tobacco Index. Housing, retail and biotechnology stocks also saw notable strength moving higher along with most of the other major sectors. Meta jumped after private report stated that the company was preparing to announce a new round of job cuts, adding to layoffs last November.

Crude oil futures ended higher on Monday rebounding from early losses as investors weighed Russia plans to cut crude production and short-term demand concerns ahead of U.S. inflation data. Meanwhile, tanker loadings of crude oil from Azerbaijan at the Mediterranean terminal of Ceyhan have resumed, helping ease supply concerns. The operation of the Turkish oil terminal was suspended due to the earthquake that occurred on February 6. Benchmark crude oil futures for March delivery rose 42 cents or about 0.5 percent to settle at $80.14 a barrel on the New York Mercantile Exchange. Brent crude for April delivery gained 22 cents or about 0.3 percent to settle at $86.61 (provisional) a barrel on London's Intercontinental Exchange.

Indian rupee ended considerably lower against the US dollar on Monday weighed down by gains in the greenback in the overseas markets and a muted trend in domestic equities. Traders got anxious as growth in factory output decelerated to a two-month low of 4.3 per cent in December as manufacturing dragged the overall growth in the Index of Industrial Production (IIP) even as mining and electricity production grew at a robust pace. Besides, RBI data showed India's foreign exchange reserves dropped by $1.494 billion to reach $575.267 billion as of February 3, snapping a three-week rising trend. On the global front, dollar edged toward a five-week high versus major peers on Monday as investors increased bets on the Federal Reserve keeping monetary policy tight for longer, while waiting for a U.S. consumer price report set for release the next day.  Finally, the rupee ended at 82.73 (Provisional), weaker by 15 paise from its previous close of 82.58 on Friday.

The FIIs as per Monday's data were net buyers in both equity and debt segment. In equity segment, the gross buying was of Rs 7707.83 crore against gross selling of Rs 5982.05 crore, while in the debt segment, the gross purchase was of Rs 1413.04 crore against gross selling of Rs 1147.95 crore. Besides, in the hybrid segment, the gross buying was of Rs 3.78 crore against gross selling of Rs 8.96 crore.

The US markets ended higher on Monday amid investors awaited inflation data likely to hint at the path of the Federal Reserve's future interest rate hikes. Asian markets were trading mostly higher in early deals on Tuesday following positive cues from US markets overnight.  Indian equity markets ended lower on Monday on account of selling by IT and Capital Goods stocks. Today, markets are likely to make slightly positive start on firm global cues. Traders may get some encouragement as Commerce and industry minister Piyush Goyal has urged member countries of the IPEF group to focus on early deliverables which can benefit all the nations. Indo-Pacific Economic Framework (IPEF) was launched by the US and other partner countries of the Indo-Pacific region on May 23 last year in Tokyo. The 14 partner countries represent 40 per cent of global GDP and 28 per cent of global goods and services trade. However, some cautiousness may prevail in markets as Retail inflation breached the RBI's comfort zone and rose to a three-month high of 6.52 per cent in January 2023, mainly on account of a spike in food prices. The inflation rate based on the Consumer Price Index (CPI) stood at 5.72 per cent December and 6.01 per cent in January 2022. Traders may also remain concerned as Minister of State for Corporate Affairs Rao Inderjit Singh said illegal subsidies by trade partners and other countries hurt Indian trade and business, and that corrective actions are taken in the form of invoking dispute settlement mechanisms. Traders may take note of report that  Finance Minister Nirmala Sitharaman said crypto assets and web3 sectors require significant international collaboration for effective implementation of domestic legislations. She said these are relatively new and still evolving sectors, with no specific regulations.  There may be some buzz in road sector related stocks as Rating agency Icra has said Inflation-linked toll rates of various road projects will see a moderate hike of 2-5 per cent in the next fiscal year due to falling wholesale price index. It has revised down the outlook on the toll road sector to stable from positive for FY24, citing the easing wholesale price inflation which fell to 4.95 per cent in December 2022.

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

Nifty Top volumes

• JSW Steel has reported the crude steel production for the month of January, 2023 at 18.91 lakh tonnes, that grew by 15% as against 16.46 lakh tonnes in January 2022 on standalone basis.
• Tata Motors has unveiled the new price of the Tiago.ev, bringing to an end the launch pricing offered to its first 20,000 customers. The Tiago.ev now starts at Rs 8.69 Lakh.
• BPCL has launched Electric Vehicle Fast Charging Corridor on the Delhi - Jalandhar National Highway with fast charging stations at 12 BPCL retail outlets strategically located along the highway (part of NH-44).
• Tata Consultancy Services has expanded its collaboration to help Keysight Technologies, a leading technology company that delivers advanced design and validation solutions, reimagine its IT operating model for enhanced resilience, agility, and user experience.