Indian equity benchmarks witnessed a spike in volatility during the session and ended with losses of over a percent each on Friday, due to intense selling ahead Finance Minister Nirmala Sitharaman's third Union Budget presentation due on Monday, February 1. The benchmarks opened higher, taking support from SBI Research's report stated that with record GST collections expected in January at Rs 1.21-1.23 lakh crore, the shortfall in state GST can be narrowed to a minimal Rs 11,000 crore. Ongoing efforts to plug the leakages in GST collection has been bearing fruit since September. Traders were seen taking a note of Prime Minister Narendra Modi's statement that India is promoting investment in frontier technologies including Artificial Intelligence, additive manufacturing and interdisciplinary cyber-physical systems. Speaking at the World Economic Forum's Davos Dialogue via video conferencing, PM Modi said that the transactions at Unified Payments Interface (UPI) platforms have crossed 2 billion per month and a major portion of these transactions are taking place through the apps developed by private players. However, markets gave up gains fell sharply lower in final hour of trading session, as IMF's Chief Economist Gita Gopinath stated that it would be damaging for India to start tightening policy support in the midst of the COVID-19 pandemic. She said there is scope for the Indian government to provide more direct support to people. Markets mood was also affected after the Economic Survey 2020-21 said that India's GDP is estimated to contract by 7.7 per cent during the current fiscal. According to the survey, the real growth rate for FY22 was assumed at 11.5 per cent based on IMF estimates. Finally, the BSE Sensex fell 588.59 points or 1.26% to 46,285.77, while the CNX Nifty was down by 182.95 points or 1.32% to 13,634.60.

The US markets settled lower on Friday with cut of around 2 percent each as heightened speculative trading by retail investors continued to unnerve the market. Traders kept a close eye on heavily shorted stocks like GameStop (GME) and AMC Entertainment (AMC). GameStop and AMC Entertainment moved sharply higher after Robinhood eased restrictions on certain stocks that have skyrocketed in recent trading. Investors are concerned that if GameStop continues to rise in such a volatile fashion, it may ripple through the financial markets, causing losses at brokers like Robinhood and forcing hedge funds who bet against the stock to sell other securities to raise cash. Negative sentiment was also generated in reaction to news that Johnson & Johnson's (JNJ) one-dose coronavirus vaccine appears to be less potent against variants. J&J said the vaccine demonstrated 72 percent effectiveness in the US compared to 66 percent in Latin America and 57 percent in South Africa. On the economic data front, the Commerce Department released a report showing a much bigger than expected increase in US personal income in the month of December, although the report also showed a modest decrease in personal spending. The report said personal income climbed by 0.6 percent in December after tumbling by a downwardly revised 1.3 percent in November. Meanwhile, the Commerce Department said personal spending dipped by 0.2 percent in December after falling by a downwardly revised 0.7 percent in November. The University of Michigan also released a report showing consumer sentiment deteriorated by slightly more than initially estimated in the month of January. The report said the consumer sentiment index for January was downwardly revised to 79.0 from the preliminary reading of 79.2.

Crude oil futures ended lower on Friday, as worries about the outlook for energy demand due to rising coronavirus cases and delays in vaccine supplies weighed on prices. Oil prices were also weighed down by uncertainty about additional stimulus from the Biden administration happening anytime soon. However, stronger than expected GDP data from Germany and France limited oil's downside. Meanwhile, according to Baker Hughes, the number of active US rigs drilling for oil rose by six to 295 this week, rising for the ninth straight week. The total active US rig count rose to 384, adding six this week. Crude oil futures for March fell $0.14 or 0.3 percent to settle at $52.20 barrel on the New York Mercantile Exchange. March Brent crude declined $0.16 or 0.29 percent to settle at $54.94 a barrel on London's Intercontinental Exchange.

Erasing prevision drubbing, Indian rupee ended significantly higher against dollar on Friday, on persistent selling of the American currency by exporters. Sentiments got support with SBI Research's report stated that with record GST collections expected in January at Rs 1.21-1.23 lakh crore, the shortfall in state GST can be narrowed to a minimal Rs 11,000 crore. Ongoing efforts to plug the leakages in GST collection has been bearing fruit since September. However, upside remain limited as IMF's Chief Economist Gita Gopinath stated that it would be damaging for India to start tightening policy support in the midst of the COVID-19 pandemic. On the global front, dollar gained and risk-sensitive currencies fell on Friday after an assault on hedge-fund equity short positions in the United States rattled investor confidence and boosted demand for safe-haven currencies. Finally, the rupee ended at 72.96, 9 paise stronger from its previous close of 73.05 on Thursday.

The FIIs as per Friday's data were net seller in equity segment and net buyer in debt segment. In equity segment, the gross buying was of Rs 8537.50 crore against gross selling of Rs 12318.58 crore, while in the debt segment, the gross purchase was of Rs 654.51 crore with gross sales of Rs 423.18 crore. Besides, in the hybrid segment, the gross buying was of Rs 8.83 crore against gross selling of Rs 9.13 crore.

The US markets ended lower on Friday, as extreme volatility in a batch of small, heavily shorted companies such as GameStop, AMC Entertainment and Blackberry raised broader concerns about a bubble in a market. Asian markets are trading mixed on Monday amid worries that problems with vaccine rollouts combined with new strains of Covid-19 will delay a global economic recovery that has already been baked into the market's rich valuations. Indian markets gave up early gains to end sharply lower on Friday amid souring risk sentiment in the global markets. Today, the markets are likely to make slightly positive start as investors await the Budget announcement coming amidst the backdrop of the Covid-19 pandemic. Finance Minister Nirmala Sitharaman is slated to present the Budget for FY22 in the Parliament at 11 am today. This Budget is more keenly eyed as it comes on the heels of an unprecedented pandemic that changed India's economic landscape. Expectations remain high that the government will deliver introduce pro-cyclical measures to further strengthen the ongoing economic recovery. However, concerns remain amid possibility of increase in taxes or cess to shore up the government's coffers. Traders will be taking encouragement with the Finance Ministry's statement that GST collections for January touched an all-time high of about Rs 1.20 lakh crore. Some support will come with report that retail inflation for industrial workers eased to 3.67 per cent in December 2020 against 9.63 per cent in the same month of last year due to lower prices of certain food items. Also, foreign portfolio investors (FPI) have remained net buyers to the tune of Rs 14,649 crore in Indian markets in January, amid availability of global liquidity and emerging markets being a preferred destination for foreign funds. Traders may take note of report that apex exporters body FIEO has asked the government to announce the rates for different sectors under the tax refund scheme RoDTEP as further delay will have serious implications for future exports. Meanwhile, the commerce ministry has recommended imposition of anti-dumping duty for five years on a Chinese chemical used in dye and pharma industries to guard domestic players from cheap imports. Agriculture industry related stocks will be in focus with Chief Economic Adviser K V Subramanian's statement that legislations will have multiple benefits for the farmers, amid the ongoing controversy over the three new farm laws. There will be some reaction in aviation industry stocks as the Economic Survey 2020-21 stated that air passenger traffic and aircraft movements are predicted to reach pre-COVID levels in early 2021. Power stocks will be in limelight as Power Secretary S N Sahai said that power demand touched an all-time high of 189.64 GW on Saturday. Besides, as host of macro-economic data and auto sales figures are also scheduled to be released this week. RBI interest rate decision on Friday is another major event that would drive market sentiments this week.

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

Nifty Top volumes

• Adani Ports and Special Economic Zone has raised $500 million by selling 10-year bonds to international investors at a coupon of 3.10 percent. 
• Power Grid Corporation of India has filed draft papers with the SEBI for floating an InVIT through which it seeks to raise more than Rs 5,000 crore. 
• Reliance Industries' telecom arm -- Reliance Jio Infocomm has added 19,36,407 customers in November 2020.
• L&T's construction arm -- L&T construction's Heavy Civil Infrastructure business has secured a significant contract from two packages of the Mumbai Ahmedabad High Speed Rail Corridor.