Friday turned out to be an awful day of trade for Indian equity benchmarks, with frontline gauges tumbling below their crucial 10,800 (Nifty) and 35,100 (Sensex) levels, as traders took beating on the back of several announcements made yesterday in his speech by Finance Minister Arun Jaitley during Union Budget 2018. After making a gap-down opening, markets never looked confidant and extended their southward journey to end at day's lows. The Finance Minister's proposal to levy long-term capital gains tax (LTCG) on equities investments mainly dampened sentiment. This move may reduce incentive for investors to hold equities for longer term as the difference between tax on short and long term capital gains is only 5%. Besides, the imposition of a fresh tax on income from Mutual Funds could also have spooked investors. Sentiments also remained dampened on report that India's fiscal deficit, for nine months of Financial Year 2018, stands at Rs 6,20,949 crore, overshooting the budgeted estimate (BE) target by 113.6%. The government has estimated Rs 5,46,532 crore of fiscal deficit for FY18 which during the same period of the last year stood negative at 93.9%. Markets extended southward journey after Fitch Ratings said that high debt burden of the government constrains India's rating upgrade, a day after Finance Minister Arun Jaitley projecting a fiscal deficit of 3.5% of GDP against the earlier target of 3.2%. The report enlightened that weak public finances constrain India's sovereign ratings, given a high general government debt burden of around 68% of GDP and a wide fiscal balance of 6.5% of GDP if states are included. Traders failed to draw any solace with Finance Minister Arun Jaitley's statement that India's $2.5 trillion economy is now firmly on course to register a strong growth rate of over 8% and indicated that the country has grown on an average of 7.5% in the first three years of the Modi government. Finally, the BSE Sensex tumbled 839.91 points or 2.34% to 35,066.75, while the CNX Nifty was down by 256.30 points or 2.33% to 10,760.60.

The US markets tumbled on Friday, with the main benchmarks suffering their biggest one-day drops in more than a year and posting the steepest weekly losses in about two years. The selling, which traders called orderly, continued throughout the session, as investors digested a stronger-than-expected jobs report that stoked inflation fears and contributed to a continued rise in bond yields. Meanwhile, outgoing Federal Reserve Bank Chair Janet Yellen said that solid economic growth, faster wage increases, and a tightening labor market mean the US central bank is likely to need to continue to raise interest rates gradually, as it has signaled it will. Separately, San Francisco Federal Reserve Bank President John Williams said that a pickup in wage growth and inflation are signs of a healthy economy and at this point are not enough to force the US Federal Reserve to raise rates much more this year than the three times it has been signaling. On the economy front, the University of Michigan's consumer sentiment index fell slightly in January but remained near a post-recession high, reflecting an optimistic outlook by Americans buoyed by record stock-market gains and recent tax cuts. The Dow Jones Industrial Average lost 665.75 points or 2.54 percent to 25,520.96, the Nasdaq dropped 144.917 points or 1.96 percent to 7,240.95, the S&P 500 edged lower by 59.85 points or 2.12 percent to 2,762.13.

Crude oil prices settled lower on Friday as data pointing to signs of rising output weighed on sentiment. According to data from energy services firm Baker Hughes, the number of oil rigs operating in the US rose by six to 765, the highest level since August 11. Besides, the dollar surged following strong US jobs numbers also dampened the sentiments. The dollar rose after US jobs growth surged in January and wages rose, recording their largest annual gain in more than 8-1/2 years. Though, compliance with output cuts by OPEC and rising global demand kept much of the early year oil rally in place. Benchmark crude oil futures for March delivery decreased 35 cents at $65.45 a barrel on the New York Mercantile Exchange. Brent crude lost 1.65% to $68.50 a barrel on London's Intercontinental Exchange.

Indian rupee pared all of its gains and ended marginally weaker against dollar on Friday, on the back of heavy capital outflows from the domestic equity market. Investors remained worried with a report that India's fiscal deficit, for nine months of Financial Year 2018, stands at Rs 6,20,949 crore, overshooting the budgeted estimate (BE) target by 113.6%. The government has estimated Rs 5,46,532 crore of fiscal deficit for FY18 which during the same period of the last year stood negative at 93.9%. Besides, the dollar rose to a position of strength overseas too made the rupee weaker. On the global front, dollar ticked up against a basket of currencies, ahead of hotly anticipated US non-farm payrolls data later, which will be closely watched for clues on the outlook for US interest rates. Finally, the rupee ended at 64.06, 4 paise weaker from its previous close of 64.02 on Thursday.

The FIIs as per Friday's data were net buyers in equity and debt segments both. In equity segment, the gross buying was of Rs 7721.20 crore against gross selling of Rs 6555.36 crore, while in the debt segment, the gross purchase was of Rs 2586.62 crore with gross sales of Rs 1288.44 crore. Besides, in the hybrid segment, there was no buying against gross selling of Rs 0.38 crore.

The US markets witnessed slaughter on Friday and with major indices went home with a cut of over two percent, as traders remained concerned about higher interest rates came after the Labor Department released a report showing stronger than expected job growth and a jump in wages. Asian indices were trading in red following large declines in the U.S. and Europe on Friday. Also, investors were worried that rising inflation could prompt central banks to tighten monetary policy faster than expected. Indian shares witnessed bloodbath on Friday, as rising oil prices, fiscal deficit woes and the Budget proposal to levy long-term capital gains tax on equities raised concerns over reduced capital inflows into the stock market. Today, the start is likely to be on the negative side amid weak global cues. Traders will remained concerned with Fitch Ratings' statement that high debt burden of the government constrains India's rating upgrade, after Finance Minister Arun Jaitley projecting a fiscal deficit of 3.5 per cent of GDP against the earlier target of 3.2 per cent. Meanwhile, Arun Jaitley said that the economy has entered into a phase of consolidation after a series of structural reforms which were initiated in the past two years. Some support may come later in the day with Agriculture Secretary, SK Pattanayak's statement that he is confident that the sector will continue to grow at over six percent in FY19. He also talked about the government's plan to tap global market for agricultural products and added that the export policy on producing enough for domestic and cater to international markets is going to be put in place. Stocks related to chemical sector will be in focus after the government planning to impose antidumping duty on import of a chemical, used in industries like plastics, from four countries, including China, for three years to guard domestic players from cheap shipments. There will be lots of important earnings announcements too, to keep the markets buzzing.

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

Nifty Top volumes

• Bajaj Auto has registered a jump of 46% in total sales to 3,53,147 units in January 2018 against 2,41,917 units in January 2017.
• Lupin has launched Clobetasol Propionate Lotion 0.05% having received an approval from the USFDA earlier.
• Yes Bank has received an approval for issuance and allotment of fixed rate notes for an aggregate principal amount of $600 million under the MTN Programme.
• Coal India has reported provisional production of 56.69 MT in January 2018, as against a target of 63.32 MT.