Indian equity bourses sustained their gaining rally on Friday, with Sensex & Nifty ending higher by around 0.55% each. The start of the day was on a cautious note, amid a private report that government's tax revenue shortfall for FY20 is estimated to be at around Rs 2 lakh crore. The revenue shortfall from direct tax sources is being pegged at around Rs 1.5 lakh crore to Rs 1.8 lakh crore, while that from indirect sources is estimated to be at around Rs 30,000 crore to Rs 60,000 crore. But soon, indices staged sharp recovery, as RBI raised the investment limit for foreign portfolio investors in government & corporate bonds. Key benchmarks remained in green terrain with strong gains for the most part of the trading session, on the back of firm cues from the global markets. Traders got encouragement, with  a private report stating that deal activity by private venture investors grew by 28 per cent to $48 billion in 2019, propelled by infrastructure bets, but will slow down to under 20 per cent in 2020. Some support also came with reports that the government think-tank Niti Aayog will develop a national data and analytics platform to make all government data accessible to stakeholders in a user-friendly manner. Finally, the BSE Sensex gained 226.79 points or 0.55% to 41,613.19, while the CNX Nifty was up by 67.90 points or 0.56% to 12,248.25.

The US markets ended lower on Friday after the Centers for Disease Control and Prevention confirmed the second case of the Chinese coronavirus in the US. It said the patient, a woman in her 60s, recently returned from a trip to Wuhan, China, and is currently doing well and in stable condition. China confirmed 830 cases of infection, with the official death count at 26. The death toll at 26 and concerns are growing that the travel bans in place will start to have a major impact on the economy with some calling for a 1 percentage point hit or greater with Chinese GDP.  However, the markets initially benefited from a positive reaction to earnings reports from big-name companies like Intel (INTC) and American Express (AXP). Shares of Intel surged up by 8.1 percent after the semiconductor giant reported fourth quarter results that exceeded street estimates on both the top and bottom lines. Intel also provided upbeat guidance for the current year and said its board of directors approved a five percent cash dividend increase. American Express also ended the day notably higher after the financial services giant reported better than expected fourth quarter results. Besides, US purchasing manager activity was better than expected The IHS Markit composite PMI was 53.1 in January, a 10-month high. 

Magnifying their recent losses, crude oil futures ended lower with cut of over two percent on Friday, on fears the spread of the coronavirus in China elsewhere will undercut demand for crude, which had seen prices already under pressure due to worries about a potential oversupply.  China's National Health Commission confirmed more than 800 cases of the coronavirus, an illness akin to severe acute respiratory syndrome (SARS). So far, the death toll has risen to 26 from 17. In the US, the Centers for Disease Control and Prevention confirmed a second case of coronavirus. Cases have also been reported in other countries. Crude oil futures for March dropped $1.40 or 2.5 percent to settle at $54.19 a barrel on the New York Mercantile Exchange. March Brent fell $1.35 or 2.2 percent to settle at $60.69 a barrel on London's Intercontinental Exchange.

Indian rupee ended lower for second day against dollar on Friday, on persistent dollar demand from importers. Investors remained cautious amid a private report that government's tax revenue shortfall for FY20 is estimated to be at around Rs 2 lakh crore. The revenue shortfall from direct tax sources is being pegged at around Rs 1.5 lakh crore to Rs 1.8 lakh crore, while that from indirect sources is estimated to be at around Rs 30,000 crore to Rs 60,000 crore. Rise in crude oil prices and dollar's strength against some other currencies overseas also impacted the rupee movement. However, a firm trend in domestic equities kept the downside in check. On the global front, euro held near seven-week lows on Friday after the European Central Bank struck a more dovish tone at Thursday's meeting than some had expected. Finally, the rupee ended at 71.33, 7 paise weaker from its previous close of 71.26 on Thursday.

The FIIs as per Friday's data were net buyers in both equity and debt segments. In equity segment, the gross buying was of Rs 8035.97 crore against gross selling of Rs 6538.80 crore, while in the debt segment, the gross purchase was of Rs 1392.96 crore with gross sales of Rs 1137.45 crore. Besides, in the hybrid segment, the gross buying was of Rs 0.46 crore against gross selling of Rs 3.64 crore.

The US markets ended lower on Friday after the Centers for Disease Control and Prevention confirmed the second case of the Chinese coronavirus in the US. Asian markets are trading in red on Monday on growing concerns over the scope of a China virus outbreak. Indian markets ended higher for the second straight session on Friday, tracking rally in banking stocks amid recovery in global equities. Today, the markets are likely to get a gap-down opening of the crucial F&O series expiry week tacking sell-off in the global markets. Also, there will be some cautiousness ahead of Union Budget 2020 to be presented later in the week. There will be some concern with a private report indicating that the country's fiscal deficit for 2019-20 is expected to widen to 3.8%and the upcoming Budget may set a target of 3.5% for 2020-21. There will be some cautiousness with report that India plans to increase import duties on more than 50 items including electronics, electrical goods, chemicals and handicrafts, targeting about $56 billion worth of imports from China and elsewhere. However, some support may come later in the day with report that foreign portfolio investors (FPI) have infused a net sum of Rs 1,624 crore into the Indian capital markets in January so far, buoyed by the signing of the first phase of the US-China trade deal. Also, IMF chief Kristalina Georgieva has said growth slowdown in India appears to be temporary and she expects the momentum to improve going ahead. Traders may take note of report that the government is likely to soon decide on permitting Indian companies to list their equity shares overseas. There will be some buzz in the infra stocks with Union minister Nitin Gadkari's statement that the government plans to complete three of the 22 expressways and green corridors in the next three years, including the flagship Delhi Mumbai Expressway being built at a new alignment. Fertiliser stocks will be in focus with report that the government may consider cut in import duty on raw material used in the fertiliser industry in the forthcoming budget with a view to boost domestic manufacturing in the country. There will be some reaction in jewelry stocks with the commerce ministry data showing that gold imports fell 6.77% to $23 billion during the April-December period of the current financial year. There will be lots of important earnings announcements too, to keep the markets in action.

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

Nifty Top volumes

• Tata Motors is looking for liquidating inventory of its BS-IV cars by end of the FY20, as new emission norms will come into force from April 1, 2020. 
• Bajaj Auto and iconic British motorcycle brand Triumph has formally commenced their non-equity global partnership to manufacture a new range of mid-capacity motorcycles in the country. 
• Maruti Suzuki India has commenced exports of its chartbuster S-PRESSO to overseas markets. 
• HDFC Bank has expanded its presence in the Mid-market segment in Chhattisgarh.