The January series expiry of Futures and Options turned out to be jubilant event for the Indian frontline indices, which finished the session with strong gains of over a percentage point on account of fresh buying ahead Union Budget next week. Hefty short covering in the dying hours ahead of the series expiry stoked the benchmarks to settle near the high point of the day. Sentiments remained upbeat with report that Donald Trump and Narendra Modi have discussed opportunities to strengthen the partnership between the United States and India in broad areas such as the economy and defense. Strong earnings from lenders such as HDFC Bank and Kotak Mahindra Bank raised optimism that the impact of note ban could be less than expected. Kotak Mahindra Bank posted a 34% Y-O-Y increase in its consolidated net profit at Rs 1266.59 crore for the quarter ended December 2016, while HDFC Bank reported 15.15% rise in its net profit at Rs 3865.33 crore for the quarter as compared to Rs 3356.84 crore for the same quarter in the previous year. Some support also came with the repot that Germany is set to finance long-term strategic projects in India particularly in the railway, infrastructure and smart cities sectors as part of efforts to support India's growth story. Meanwhile, the markets paid no heed to a  report that demonetisation has stymied India's GDP growth and the October-December quarter show is likely to be around 6%, while for January-March it could climb down to 5.7%. According to the financial services major, the consumption and services, which were the fastest growing segments pre-demonetisation, were the worst-hit. Meanwhile, credit ratings agency India Ratings in its report said most Indian companies with overseas debt have not hedged enough of their foreign currency risk, making them vulnerable to any sharp movements in the rupee. The study of 100 companies holding 19.5 trillion rupees ($286.30 billion) of debt abroad as of March 2016, showed 54 of them, with 14.5 trillion exposure, were vulnerable given only 35 percent of their balance sheets were hedged. Finally, the BSE Sensex gained 332.56 points or 1.21% to 27708.14, while the CNX Nifty was up by 126.95 points or 1.5% to 8,602.75. Indian markets remained closed on Thursday on account of Republic Day holiday.

The US markets closed mostly lower on Thursday, while the Dow Jones Industrial Average extended its run into the record books. The election of Donald Trump and his pro-business policies have been part of the impetus for higher highs in equities, but investors also have been closely following corporate earnings to gauge if stock valuations are justified. On the economy front, the number of Americans who applied for unemployment benefits climbed by 22,000 to a one-month high of 259,000 in the week stretching from January 15 to January 21, but the level of layoffs remained extremely low. Despite the sharp increase, new claims came in under the key 300,000 thresh-hold for the 99th straight week, a streak last repeated in 1970 that shows no sign of ending. The economy had created more than 2 million jobs for six straight years to pull the unemployment rate below 5%. The less volatile four-week average of initial claims fell by 2,000 to 245,500. Continuing jobless claims rose by 41,000 to 2.1 million in the week ended January 14. Separately, there are signs the US economy is accelerating, according to two indicators released. The Conference Board's leading economic index grew 0.5% in December, marking the fourth straight rise. The Nasdaq lost 1.16 points or 0.02 percent to 5,655.18, S&P 500 was down by 1.69 points or 0.07 percent to 2,296.68, while the Dow Jones Industrial Average added 32.40 points or 0.16 percent to 20,100.91.

Crude oil futures surged higher on Thursday as investors took note of a rally in share markets and looked ahead to US rig count figures on Friday. Traders also took some support with the dollar weakness, as the greenback against a basket of currencies, was down below 100, a level crossed and held for most of the two months since the U.S. presidential election. Though, the US Energy Information Administration (EIA) reported an increase of 2.8 million barrels in domestic crude-oil supplies for the week ended Jan. 20. Benchmark crude oil futures for March delivery moved up by $1.03 or 1.95 percent to $53.78 on the New York Mercantile Exchange. In London, Brent crude for March delivery ended up by $1.16 or 2.11 percent at $56.24 on the ICE.

Indian rupee ended stronger against dollar on Wednesday, on the back of dollar sales by exporters and bank due to weakness of the Greenback in overseas markets. Traders took some encouragement with report that Donald Trump and Narendra Modi have discussed opportunities to strengthen the partnership between the United States and India in broad areas such as the economy and defense. Some support also came with a private report's statement that the Indian government is expected to continue with fiscal consolidation and deliver a popular, but not a populist budget with a fiscal deficit target of 3% in 2017-18. Besides, smart rally in the local equity markets too supported the local unit. On the global front, dollar edged lower against yen as Japan trade showed a surprise gain on exports and investors noted the most recent tweet by President Donald Trump signaled he would sign an executive order on Wednesday to build a wall on the border with Mexico. Finally, the rupee ended at 68.07, 7 paise stronger from its previous close of 68.14 on Tuesday.

The FIIs as per Wednesday's data were net buyers in equity segment, while they were net sellers in debt segment. In equity segment, the gross buying was of Rs 5153.98 crore against gross selling of Rs 5043.48 crore, while in the debt segment, the gross purchase was of Rs 772.29 crore with gross sales of Rs 1027.88 crore.

The US markets made a mixed closing in last session following a lackluster trade as traders seemed reluctant to make significant moves after yesterday's gains, though Dow still ended the session at a new record closing high. The Asian markets have made mostly a positive start and the Japanese market was trading higher as the pace of consumer prices decline eased as oil costs rose, supporting expectations for a return to inflation later this year. The Indian markets before going for a holiday posted strong gains and the Nifty reclaimed the crucial 8600 level. Today, the start of the new series is likely to be in green and the markets will be extending the gains, as the Finance Ministry has said that the drive to transform India will continue in Budget 2017-18 to be unveiled by Finance Minister Arun Jaitley on February 1. Though, days ahead of the budget, global rating agency Moody's has said that its positive outlook on India reflects expectations of continued policy reforms reducing government debt even as it feels that the high debt level limits room to cut fiscal deficit quickly. It also said the economy will return to the previous trend by mid-2017 after temporary effects of demonetisation fade away. President Pranab Mukherjee too has said that demonetisation may have led to “temporary” slowdown in economy but it will bring more transparency in the system. The sugar stocks will be in action, as the Indian Sugar Mills' Association (ISMA) has revised downwards its estimates for sugar production during the 2016-17 season (October-September) to 213 lakh tones, in view of drought in key growing states of Maharashtra and Karnataka. There will be some buzz in pharma stocks, as the Indian pharmaceutical sector is likely to gain, rather than being impacted, as the new US President Donald Trump aims to reduce drug prices since the country's generic medicines are already affordable. 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

• Housing Development Finance Corporation is planning to raise Rs 2,000 crore by issuing secured redeemable non-convertible debentures of two-year tenor on private placement basis at a coupon of 7.49 percent.
• Bharti Airtel has reported 54.54% fall in its Consolidated net profit after tax, minority interest at Rs 503.70 crore for the quarter ended December 31, 2016, as compared to Rs 1108.10 crore for the same quarter in the previous year.
• Tata Consultancy Services in collaboration with Gfi Informatique, has unveiled Smart City Technology to enhance urban transportation in France.
• Maruti Suzuki India has reported 47.46% jump in its net profit at Rs 1744.50 crore for the quarter ended December 31, 2016 as compared to Rs 1183.00 crore for the same quarter in the previous year.
• Tata Power Delhi Distribution, a joint venture of Tata Power and the Government of Delhi, has implemented a microgrid project in Bihar.