Indian equity benchmarks extended gains to a third straight day on Thursday, led by strong performance in Power, Metal and Banking stocks.  After making cautious start, benchmark indices rebounded sharply post RBI's announcements. Reserve Bank of India (RBI) kept the benchmark interest rate unchanged at 4 per cent and decided to continue with its accommodative stance as long as necessary to support growth and keep inflation within the target. Besides, RBI retained its growth projection at 9.2 per cent and inflation at 5.3 per cent for the current financial year. Traders also found some solace with Union Minister of State for Commerce and Industry Som Parkash stating that India has received Foreign Direct Investment (FDI) inflows worth $339.55 billion in the last five financial years. There has been a continuous increase in the inflow of FDI in recent years. It increased from $45.15 billion in 2014-15 to $81.97 billion in 2020-21. Markets maintained their upward momentum in the late afternoon session, taking support from Minister of State for Commerce and Industry Anupriya Patel's statement that India is in discussion with the 10-nation bloc ASEAN for initiating the review of the free-trade agreement in goods between the two regions to seek more market access for domestic products. Some optimism also came with Finance Minister Nirmala Sitharaman's statement that the projected fiscal deficit of 6.9 per cent for the current financial year is a responsible target as the government has tried to ensure a balance between keeping up expenditure and being fiscally prudent. The minister also said the Rs 1 lakh crore loan for states will help in speeding up infrastructure development and capital expenditure. Meanwhile, Revenue Secretary Tarun Bajaj said the government is open to some tinkering in the varied rates and holding period for computation of capital gains tax on shares, debt and immovable property, in a bid to make it simple. Finally, the BSE Sensex rose 460.06 points or 0.79% to 58,926.03 and the CNX Nifty was up by 142.05 points or 0.81% to 17,605.85.

The US markets ended deeply in red on Thursday after a key inflation report showed a faster-than-expected rise in prices and boosted the benchmark 10-year Treasury yield above a key level. A highly anticipated Labor Department report showed the annual rate of growth in consumer prices accelerated more than expected in the month of January. The report showed consumer prices in January were up by 7.5 percent compared to the same month a year ago, reflecting the fastest annual growth since February of 1982. Street had expected the annual rate of growth to reach 7.3 percent. The faster year-over-year growth came as the Labor Department said its consumer price index climbed by 0.6 percent in January, matching the upwardly revised advance seen in December. Street had expected consumer prices to rise by 0.5 percent, matching the increase originally reported for the previous month. The report showed core consumer prices, which exclude food and energy prices, also advanced by 0.6 percent in January, matching the increase seen in December. Street had also expected core prices to rise by 0.5 percent. The annual rate of growth in core prices accelerated to 6.0 percent in January from 5.5 percent in December, showing the biggest jump since August of 1982. The data raised concerns that the Federal Reserve will increase interest rates more aggressively in an effort to fight elevated inflation. On the sectoral front, Interest rate-sensitive housing stocks moved sharply lower over the course of the session, dragging the Philadelphia Housing Sector Index down by 3.4 percent. Substantial weakness also emerged among semiconductor stocks, as reflected by the 3.2 percent nosedive by the Philadelphia Semiconductor Index.

Crude oil futures ended in green on Thursday amid fears that the US Federal Reserve will hike rates more aggressively than expected to fight inflation. After US inflation data came in at its hottest in 40 years, St. Louis Federal Reserve Bank President James Bullard said he wants a full percentage point of interest rate hikes by July 1.  However, concerns over a probable return of Iranian oil supplies to the global markets limited oil's uptick. As Iran nuclear deal talks enter the final stretch, investors fear that additional Iranian supplies alongside rising US shale oil production would swing the balances into a sizeable surplus. Meanwhile, the dollar gave up some of its earlier losses. A stronger greenback makes oil and other commodities more expensive for those holding other currencies. Benchmark crude oil futures for March delivery gained $0.22 or about 0.25 percent to settle at $89.88 a barrel on the New York Mercantile Exchange. However, Brent crude for April delivery fell $0.14 or 0.15 percent to settle at $91.41 a barrel on London's Intercontinental Exchange.

Continuing previous session weakness, Indian rupee ended lower against dollar on Thursday on emergence of demand for the greenback after the Reserve Bank of India kept benchmark lending rate unchanged and said it will continue with the accommodative stance. The MPC voted unanimously to keep the repo rate unchanged at 4 percent and voted 5:1 to continue with an 'accommodative' stance for as long as necessary to revive growth on a sustainable basis. This is the third straight session when the rupee is traded lower against dollar. Meanwhile, Anupriya Patel stated that India is in discussion with the 10-nation bloc ASEAN for initiating the review of the free-trade agreement in goods between the two regions to seek more market access for domestic products. On the global front, pound edged up against the dollar on Thursday amid generally calm currency markets as investors await key data on U.S. inflation which will inform the Federal Reserve's policy tightening plans. Finally, the rupee ended at 74.94, weaker by 10 paise from its previous close of 74.84 on Wednesday.

The FIIs as per Thursday's data were net sellers in both equity and debt segment. In equity segment, the gross buying was of Rs 6434.97 crore against gross selling of Rs 7085.18 crore, while in the debt segment, the gross purchase was of Rs 281.52 crore with gross sales of Rs 991.68 crore. Besides, in the hybrid segment, the gross buying was of Rs 66.19 crore against gross selling of Rs 63.83 crore.

The US markets ended lower on Thursday after worse-than-expected US inflation data stokes fears of aggressive rate hikes by the Fed. Asian markets are trading mostly in red on Friday tracking overnight losses on Wall Street. Indian markets continued to rise for a third straight session on Thursday as investors cheered a dovish RBI policy. Today, the markets are likely to make gap-down opening amid weakness across global markets. There will be some cautiousness as Former Reserve Bank of India Governor D Subbarao said the concern today was that the low interest rates and the enormous liquidity available in the system could potentially disrupt financial stability. He added that the challenge for central banks and for the Reserve Bank of India was to juggle between maintain price stability, supporting growth and employment, preserving financial stability and all this in a globalised world. However, some respite may come later in the day as Finance minister Nirmala Sitharaman said that India is the fastest growing economy despite the pandemic and asserted that the government managed the economy well. Some support may come with RBI report that the consumer confidence has shown gradual improvement for the third successive round of the survey. The Reserve Bank of India (RBI) said the current situation index (CSI) increased marginally on the back of better sentiments on general economic situation, household income and spending. Meanwhile, Commerce and Industry Minister Piyush Goyal said India and Australia are looking to finalise an early harvest agreement in the next 30 days and this pact is likely to cover most areas of interest that both the countries have. There will be some buzz in the banking stocks as RBI data showed that bank credit grew by 8.21 per cent to Rs 115.82 lakh crore and deposits by 8.31 per cent to Rs 160.33 lakh crore in the fortnight ended January 28. Textile industry stocks will be in focus as India Ratings and Research (Ind-Ra) said reduction in impact of Covid-19's third wave, as well as accelerated re-opening activities, will boost textile demand in FY23. There will be some reaction in healthcare industry stocks as the Reserve Bank of India (RBI) proposed to extend the term-liquidity facility of Rs 50,000 crore offered to emergency health services by three months till June 30, 2022. Investors awaited the last leg of corporate earnings for cues.

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

Nifty Top volumes

• Tata Steel's subsidiary -- Tata Steel Long Products has accepted Letter of Award to acquire 93.71% stake in Neelachal Ispat Nigam. 
• Dr. Reddy's Laboratories has received the EIR from the USFDA, for API manufacturing plant at Middleburg, New York, indicating closure of the audit. 
• L&T's Hydrocarbon business has secured two offshore projects from a prestigious overseas client.  
• Bharti Airtel has launched its new video streaming service - Airtel Xstream Premium.