Indian equities

Accordingly, the rupee is expected to trade with a weak bias up to 75 to a USD in the coming week. Notably, a rate hike by the US Federal Reserve can potentially drive away more FII money from India and other emerging markets.

Accordingly, Sensex settled 0.7 per cent or 427 points down at 59,037 points, whereas Nifty 0.8 per cent or 140 points down at 17,617 points. "(Also), weak sentiments from global markets due to persistent inflationary worries and weaker-than-expected earnings added to the selling pressure," said Vinod Nair, Head of Research at Geojit Financial Services.

Globally, almost all Asian and European markets were in the red amidst growing fears that Federal Reserve plans to fight surging inflation by ramping up interest rates faster than previously anticipated. On the domestic front, volumes on the NSE were a little higher than recent average. Among sectors, stocks of Oil & Gas and Auto were the only ones in the green whereas Realty, Banks, Telecom and IT indices lead the losses.

Sensex traded at 61,099 points, down 0.4 per cent from the previous close of 61,308 points. It opened at 61,219 points.

Accordingly, the brokerage house expects its coverage universe of 23 lenders to report 51 per cent YoY growth during the period under review. This trend, the report said will come largely on the back of expected normalisation of provisions. "The pace of collections and recoveries continues to improve, which, concurrent with normalised economic activity, is likely to moderate the stressed pool," the report said.

Notably, with Thursday's marginal gains, indices traded on a positive note for fifth consecutive session. Return of foreign portfolio investors (FPIs) into the Indian equity segment likely supported the market sentiment. On Thursday, the Sensex and Nifty settled at 61,235 points and 18,257 points, up 0.14 per cent and 0.25 per cent from their previous close, respectively.

After a continuous sell-off in the past three months, foreign portfolio investors returned into the equity market and have turned net buyers in the first week of January. FPIs returning into the market also kept equity markets buoyed in 2022. The Sensex and Nifty settled at 60,616 points and 18,055 points, up 0.4 per cent and 0.3 per cent from their previous close, respectively.

"Amid weak global markets and rising Covid cases, the domestic market displayed strong momentum on expectations of a healthy start to the earnings season. PSU Banks led the sectorial rally as reports suggested an increase in FPI limits while the realty sector followed the trend on robust sales numbers and expectations of support measures in the upcoming budget," said Vinod Nair, Head Of Research at Geojit Financial Services.

However, global cues such as high crude oil prices, combined with the direction of foreign fund flows and the rising surge in domestic Covid cases will impact investors' risk-taking appetite. "A gradual pick up in volumes including from FIIs and DIIs along with stable domestic cues and release of advanced estimates of a rise in FY22 GDP by 9.2 per cent portend well for the near term," said Deepak Jasani, Head of Retail Research, HDFC securities.

Besides, persistently high energy costs could subdue the rupee bulls. However, re-commencement of FIIs inflows will arrest any major fall in rupee's value vis-a-vis the US dollar. "Rising trade deficit as well as concerns over US Fed's taper measures and rising yields can put pressure on rupee in coming year," said Sajal Gupta, Head, Forex and Rates at Edelweiss Securities.