Indian equity benchmarks recovered partially from day's lows but failed to erase all the losses and ended with around a percent lower on Thursday, amid weakness in the global market that declined as the US Federal Reserve's signal to steadily tighten policy soured global investor sentiment. The benchmark indices opened on a sharply lower note, as traders got anxious with the International Monetary Fund (IMF) in its latest update of World Economic Outlook has cut India's economic growth forecast to 9 per cent for the current fiscal year ending March 31 (FY22) from its earlier projection of a 9.5 per cent GDP growth, on concerns over the impact of a spread of new variant of coronavirus on business activity and mobility. The Indian economy had contracted by 7.3 per cent in the 2020-21 fiscal year. Continues selling in FIIs also weighed on the markets. As per provisional data available on the NSE, foreign institutional investors (FIIs) net sold shares worth Rs 7,094.48 crore on January 25. Key gauges extended losses in afternoon deals, as sentiments remain dampened with Icra Ratings' statement that the securitisation volumes in microfinance loans, which saw improvement in the first nine months of FY22, may witness some impact in the fourth quarter (Q4FY22) due to concerns around the third wave of COVID infections that may affect the repayment capabilities of the borrowers who have a marginal financial profile. Traders were cautious, as India's rank improved one place to 85 among 180 countries in a corruption perception index (CPI) of 2021, according to a new report by Transparency International which, however, raised concern over the country's democratic status. However healthy buying in the banking, auto and finance space pared the losses significantly. Traders also took some support with Vedanta's Chairman Anil Agarwal statement that India is on the growth path with innovation and digitalisation and stressed that government policies have created tremendous resources available for deployment in the country. Finally, the BSE Sensex fell 581.21 points or 1.00% to 57,276.94 and the CNX Nifty was down by 167.80 points or 0.97% to 17,110.15.

The US markets ended lower on Thursday, after moving sharply higher early in the session, as investors mulled over an update from the Federal Reserve. The Federal Open Market Committee this week strongly indicated the first interest rate hike since late 2018 could come as soon as March. Fed Chairman Jerome Powell rattled markets Wednesday saying the central bank has quite a bit of room to raise rates before negatively impacting employment. However, the markets initially showed a positive reaction to a Commerce Department report showing stronger than expected GDP growth in the fourth quarter of 2021. The report showed real gross domestic product spiked by 6.9 percent in the fourth quarter after jumping by 2.3 percent in the third quarter. Street had expected GDP to surge up by 5.5 percent. Meanwhile, the Labor Department released a report showing initial jobless claims pulled back in the week ended January 22nd following a bigger than expected increase in the previous week. The report said initial jobless claims fell to 260,000, a decrease of 30,000 from the previous week's revised level of 290,000. Street had expected jobless claims to drop to 260,000 from the 286,000 originally reported for the previous week. On the sectoral front, Semiconductor stocks moved sharply lower over the course of the session, dragging the Philadelphia Semiconductor Index down by 4.8 percent to its lowest closing level in over three months. Substantial weakness also emerged among gold stocks, as reflected by the 2.6 percent slump by the NYSE Arca Gold Bugs Index.

Crude oil futures ended lower on Thursday as the dollar climbed after the Fed signaled that it would start raising interest rates in March. The dollar index jumped to 97.29, the highest level since November 22, 2021, reacting to the central bank's indication that the first rate hike since 2018 will happen soon. The central bank also said asset purchases will likely halt in March and the process of balance sheet reduction will commence after it begins raising rates. Benchmark crude oil futures for March delivery fell $0.74 or 0.9 percent to settle at $86.61 a barrel on the New York Mercantile Exchange. Brent crude for March delivery dropped $0.76 or 0.85 percent to settle at $87.98 a barrel on London's Intercontinental Exchange.

Registering its third straight session of losses, Indian rupee tumbled against dollar on Thursday, on account of sustained dollar demand from importers and banks and selling pressure in domestic equities. Sentiments remained fragile as Federal Reserve officials signaled that they were on track to raise interest rates in March, given that inflation has been running far above policymakers' target and that labor market data suggests employees are in short supply. Sentiments were also down beat as the International Monetary Fund (IMF) in its latest update of World Economic Outlook has cut India's economic growth forecast to 9 per cent for the current fiscal year ending March 31 (FY22) from its earlier projection of a 9.5 per cent GDP growth, on concerns over the impact of a spread of new variant of coronavirus on business activity and mobility. On the global front, dollar climbed to multi-week highs against other major currencies on Thursday, bolstered by the prospects for faster and larger interest rate hikes in the months ahead. Finally, the rupee ended 75.09 (Provisional), weaker by 31 paise from its previous close of 74.78 on Tuesday.

The FIIs as per Thursday's data were net sellers in both equity segment and debt segment. In equity segment, the gross buying was of Rs 7375.01 crore against gross selling of Rs 14331.42 crore, while in the debt segment, the gross purchase was of Rs 397.07 crore with gross sales of Rs 460.35 crore. Besides, in the hybrid segment, the gross buying was of Rs 6.08 crore against gross selling of Rs 15.63 crore.

The US markets ended lower on Thursday as markets still processed Fed's announcements. Asian markets are trading mixed on Friday following weakness on Wall Street indices. Indian markets ended a choppy session one percent lower on Thursday, amid weakness across global markets after the Fed signalled a rate hike in March. Today, the markets are likely to make cautious start amid mixed global cues. Traders will be eyeing the Union Budget 2022-23 to be presented by Union Finance and Corporate Affairs Minister Nirmala Sitharaman on February 1, 2022, in paperless form, for further cues. However, some support may come as commerce and industry ministry said India's electronic goods exports grew 49% in April-December 2021 at $11 billion over $7.4 billion during same period last year with the US and the UAE being the top two destinations. Traders may take note of report that the Income Tax department said it has issued refunds worth Rs 1.62 lakh crore to more than 1.79 crore taxpayers so far this fiscal. This includes 1.41 crore refunds for 2020-21 fiscal amounting to Rs 27,111.40 crore. Meanwhile, India has initiated an anti-dumping probe against Ursodeoxvcholic Acid, used in the medical field, imported from China and Korea following a complaint by a domestic player. The commerce ministry's investigation arm Directorate General of Trade Remedies (DGTR) has started the probe into alleged dumping of this acid, which is used as medical therapy in gallstone disease (cholelithiasis) and for biliary sludge. There will be some buzz in the gold related stocks as the World Gold Council (WGC) said India's gold consumption is expected to rise further in 2022 after jumping 79% last year as pent-up demand and an improvement in consumer confidence are seen boosting retail jewellery sales. Renewable energy sector stocks will be in focus as a private report stated that India's renewable energy sector has the potential to employ around one million people by 2030, and most of the new jobs would be generated by small-scale renewable energy projects. There will be some reaction sugar stocks as the first estimate released by the trade body AISTA stated that sugar production in India, the world's second largest producing nation after Brazil, is estimated to increase by 2.90 per cent to 31.9 million tonnes in the ongoing 2021-22 marketing year. Telecom stocks are likely to be in limelight as the DoT has agreed with the telecom players' plea to not proceed with the process of adopting 5Gi as a national standard

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

Nifty Top volumes

• S&P has upgraded the outlook on Axis Bank from stable to positive citing an improvement in asset quality of the private sector lender. 
• Bharti Airtel has commissioned a new 21 MW solar power plant in District Bhuldana, Maharashtra. 
• Wipro has completed the acquisition of additional 13.3% equity stake in Encore Theme Technologies. 
• L&T has entered a MoU with HydrogenPro AS (OSE: HYPRO) for partnership to tap the emerging Green Hydrogen market.