Indian equity markets ended sharply lower on Thursday amid selling pressure in a majority of rate-sensitive stocks, following the Reserve Bank of India's (RBI) decision to keep its key interest rate unchanged for a sixth consecutive meeting, in line with expectations. Weekly expiry of F&O contracts also added to the volatility of Dalal Street. Markets made an optimistic start of the day. Traders got some support as responding to concerns about inflation, Finance Minister Nirmala Sitharaman underscored a reduction in core inflation, which decreased from 5.1 percent in April 2023 to 3.8 percent in December 2023, signaling improved economic resilience. Some support also came with Commerce and Industry Minister Piyush Goyal's statement that the government has set up a task force under the Department of Commerce to identify, categorise and develop tailored strategies for the resolution of non-tariff barriers. However, key gauges erased initial gains and slipped sharply into red in late morning deals, as the provisional data from the NSE showed foreign institutional investors (FIIs) net sold shares worth Rs 1,691.02 crore on February 7, 2024.  Selling further crept in as the Department of Financial Services (DFS) secretary Vivek Joshi said that India's bad bank or the National Asset Reconstruction Company (NARCL) has not made much progress but aims to take on Rs 2 lakh crore of banks' stressed or non-performing assets (NPAs) by the end of FY25. Traders overlooked the International Energy Agency's (IEA) report stating that India will emerge as the largest source of global oil demand growth between now and 2030, signaling a significant shift in the dynamics of the global oil market. Finally, the BSE Sensex fell 723.57 points or 1.00% to 71,428.43 and the CNX Nifty was down by 212.55 points or 0.97% to 21,717.95.

The US markets ended marginally in green on Thursday following the strong upward move seen over the course of the previous session. Markets turned in a relatively lackluster performance during trading on Thursday. The choppy trading on markets came as traders expressed some uncertainty about whether the markets can sustain their recent upward trend. The S&P 500 reached an intraday peak slightly above 5,000 in late-day trading but pulled back to close just below what could prove to be a key psychological level for the broad market index. On the sectoral front, reflecting the lackluster performance by the broader markets, most of the major sectors showed only modest moves on the day. Semiconductor stocks saw significant strength on the heels of Arm's strong results, however, with the Philadelphia Semiconductor Index climbing by 1.6 percent. On the economic data front, the Commerce Department released a report showing wholesale inventories in the U.S. rebounded in line with estimates in the month of December. The report said wholesale inventories climbed by 0.4 percent in December after falling by a revised 0.4 percent in November. The growth in wholesale inventories matched street expectations as well as the preliminary estimate provided late last month. The rebound in wholesale inventories came as inventories of durable goods increased by 0.6 percent, more than offsetting a 0.1 percent dip in inventories of non-durable goods. Meanwhile, the Labor Department released a report on Thursday showing first-time claims for U.S. unemployment benefits fell by more than expected in the week ended February 3rd. The report said initial jobless claims slipped to 218,000, a decrease of 9,000 from the previous week's upwardly revised level of 227,000. Street had expected jobless claims to edge down to 220,000 from the 224,000 originally reported for the previous week.

Crude oil futures ended sharply higher on Thursday as escalating tensions in the Middle East raised concerns about potential trade and supply disruptions. Middle East tensions persist as Israel has rejected a ceasefire offer from Hamas. According to reports, Israeli forces attacked the southern border city of Rafah after Prime Minister Benjamin Netanyahu rejected a ceasefire proposal. Meanwhile, supply concerns have risen following a report from the U.S. Energy Department that forecast domestic crude production will grow slower than originally expected this year. Benchmark crude oil futures for March delivery surged $2.36 or about 2.1% to settle at $76.22 a barrel on the New York Mercantile Exchange. Brent crude for April delivery rose $2.42 or about 3.05% to $81.63 per barrel on London's Intercontinental Exchange.  

Indian rupee ended flat on Thursday amid negative trend in domestic equities. Traders were cautious as the Reserve Bank of India (RBI) Monetary Policy Committee (MPC) has decided to keep the key policy repo rate unchanged at 6.5% as expected by market participants. MPC to remain focused on withdrawal of accommodation to ensure that inflation progressively aligns to the target, while supporting growth. Marginal Standing Facility (MSF) & Standing Deposit Facility (SDF) rates unchanged at 6.75% and 6.25% respectively. On the global front, the Japanese Yen fell against all its peers on Thursday after a Bank of Japan official cautioned against expectations for significant interest rate hikes. Bank of Japan (BoJ) Deputy Governor Shinichi Uchida said it is hard to see rapid interest rate rises, even after it exits its negative interest rate policy (NIRP). Finally, the rupee ended flat with its previous close of 82.96 on Wednesday.

The FIIs as per Thursday's data were net sellers in equity segment, while they were net buyers in debt segment. In equity segment, the gross buying was of Rs 14727.26 crore against gross selling of Rs 16328.58 crore, while in the debt segment, the gross purchase was of Rs 3159.23 crore with gross sales of Rs 2512.06 crore. Besides, in the hybrid segment, the gross buying was of Rs 44.02 crore against gross selling of Rs 16.03 crore.

The US markets ended higher on Thursday as investors reacted to earnings reports and U.S. jobs data, and the US dollar gained. Asian markets are mostly closed on Friday as the region enters the Lunar New Year holiday period. China, South Korea and Taiwan's markets will be shut, while Singapore and Hong Kong will see a half day of trading. Indian markets ended sharply lower on Thursday after the Reserve Bank of India's decision to keep repo rate steady with no guidance on rate cut, put pressure on private bank stocks. Today, markets are likely to extend their previous session's losses with negative start amid as rate cut hopes get delayed post RBI's policy meeting yesterday. Oil prices gained more than 3 percent overnight likely to dent sentiments. Oil prices rose on concerns of a broadening conflict in the Middle East after Israel rejected a ceasefire offer from Hamas. Also, foreign fund outflows likely to dampen sentiments in the domestic markets. Provisional data from the NSE showed that foreign institutional investors (FIIs) net sold shares worth Rs 4,933.78 crore on February 8. However, some support may come later in the day the Reserve Bank of India's (RBI) consumer confidence survey showed that the households expect improvements in general economic and employment conditions to continue over the next one year. Traders may take note of Rural Development Minister Giriraj Singh's statement that digitisation of land records and registration is expected to improve the GDP of the country by about 1.5 per cent. There will be some buzz in railways related stocks as following the interim budget announcement of 434 railway track expansion projects, the Union Cabinet Committee on Economic Affairs approved six multi-tracking projects of the Ministry of Railways with an estimated cost of Rs 12,343 crore. Telecom stocks will be in focus as the Cabinet approved the next spectrum auctions set to be held later this year with a reserve price of Rs 96,317 crore. All the available spectrum in 800, 900, 1800, 2100, 2300, 2500, 3300 megahertz (MHz) and 26 gigahertz (GHz) bands will be put to auction. There will be some reaction in coal industry stocks as India's Coal production has surged to 803.79 MT for FY 2023-24 as on February 6th, 2024, showcasing a notable increase from the 717.23 MT recorded during the corresponding period of FY 2022-23, reflecting an impressive growth rate of 12.07%. Amid stock-specific action, shares of RVNL, LIC, IRCON will be in limelight as investors react to their Q3 results. LIC's Q3 standalone profit grew 49 per cent YoY to Rs 9,444 crore. Investors likely to keep close eye on earnings of many companies to be out later in the day.

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

Nifty Top volumes

• ONGC and NTPC Green Energy have signed a Joint Venture Agreement to develop renewable energy projects focusing on offshore wind.
• TCS has entered into strategic partnership with Enento Group, a prominent provider of digital business and consumer information services in the Nordic region.
• NTPC is planning to raise up to $750 million (about Rs 6,222 crore) in the form of unsecured term loan from foreign investors.
• Tata Motors has launched the Tiago and Tigor iCNG AMT - India's 1st AMT CNG Cars.