Resuming southward journey after a session's halt, Indian equity benchmarks ended the session with a cut of over a percentage point, as global equity markets continued to tumble on worries about rising inflation and higher interest rates. After a gap-down start markets traded in red terrain throughout the session, as traders remained anxious with Former Reserve Bank of India (RBI) governor Duvvuri Subbarao's statement that Finance Minister Arun Jaitley's decision to relax on fiscal consolidation to give himself more room to spend is a questionable, and by far the most disappointing decision of the budget. He added that the finance minister inherited a fiscal deficit of 4.2% of GDP and he brought it down to 3.5%. But this was at a time when oil price was low and food prices were soft because of good monsoons. Sentiments remained dampened on report that foreign portfolio investors (FPIs) have turned wary on Indian shares again owing to the recent global market sell-off triggered by rising bond yields in developed markets including in the US and the euro zone. FPIs have sold shares worth Rs 3,665.6 crore in the domestic stock market (including provisional data of Wednesday and Thursday) in February after pumping close to Rs 13,000 crore into Indian equities in January. Traders failed to get any sense of relief with private report highlighting that fears of the Reserve Bank of India going for a rate hike are overdone and there is still room for a 25 bps rate cut in the August monetary policy review, provided rains are normal. Traders also shrugged off Nasscom's report that outlook for the Indian information technology (IT) sector is cautiously positive in 2018 as challenges remain amidst prospects of greater IT spending with global and US economies improving. Finally, the BSE Sensex declined 407.40 points or 1.18% to 34,005.76, while the CNX Nifty was down by 121.90 points or 1.15% to 10,454.95.

The US markets closed higher with a gain of around one and a half percent for the session on Friday, but recording the worst weekly losses in about two years, during one of the most frenetic stretches of trading on Wall Street. Climbing bond yields and higher inflation have been partly to blame for igniting once-dormant volatility in the market, with investors already on edge over lofty equity valuations following a mostly relentless uptrend for assets perceived as risky. The House of Representatives voted for a two-year budget deal that raises both defense and domestic spending by hundreds of billions of dollars, approving a package that would also reopen the federal government after it shut down just past midnight. The House followed the Senate in approving the sweeping bill, which would also suspend the debt limit through March 1, 2019. On the economy front, US wholesale inventories rose more than initially estimated in December, helped by a sturdy rise in auto stocks. The Commerce Department said that wholesale inventories rose 0.4 percent after a revised 0.6 percent rise in November. The department reported last month that wholesale inventories rose 0.2 percent in December. Auto inventories rose 1.7 percent after increasing 0.9 percent in November. The component of wholesale inventories that goes into the calculation of gross domestic product - wholesale inventories excluding auto stocks - rose 0.2 percent in December. The Dow Jones Industrial Average added 330.44 points or 1.38 percent to 24,190.90, the Nasdaq gained 97.332 points or 1.44 percent to 6,874.49, the S&P 500 edged higher by 38.55 points or 1.49 percent to 2,619.55.

Entering into correction mode, Crude oil futures ended lower for yet another day on Friday. The drubbing started last Friday and gathered steam this week, putting U.S. West Texas Intermediate crude on pace for its worst weekly performance in two years. Rising U.S. production, new oil fields in Nigeria and Angola, as well as a stronger dollar have dented oil prices badly in the past few weeks. Moreover, broad financial asset sell-off too weighed down the market. The Energy Information Administration (EIA) lifted its forecasts for 2018 and 2019 U.S. crude-oil production earlier this week. Benchmark crude oil futures declined $1.95 or 3.2 percent, at $59.20 a barrel on the New York Mercantile Exchange. Brent crude lost $1.66 or 2.6 percent to $63.15 a barrel on London's Intercontinental Exchange.

Indian rupee ended at a 2-week low against US dollar on Friday, following steady uptick in dollar demand from importers and banks. Cautiousness remained in the market with the report that foreign portfolio investors have turned wary on Indian shares again owing to the recent global market sell-off triggered by rising bond yields in developed markets including in the US and the euro zone. FPIs have sold shares worth Rs 3,665.6 crore in the domestic stock market (including provisional data of Wednesday and Thursday) in February after pumping close to Rs 13,000 crore into Indian equities in January. Investors failed to draw any sense of relief with private report highlighting that fears of the Reserve Bank of India going for a rate hike are overdone and there is still room for a 25 bps rate cut in the August monetary policy review, provided rains are normal. Moreover, sharp fall in equities too affected the rupee. On the global front, the dollar climbed as the US government reopened following a five-hour shutdown after the House of Representatives approved a budget which will keep it running until the end of next month. Finally, the rupee ended at 64.39, 14 paise lower from its previous close of 64.25 on Thursday.

The FIIs as per Friday's data were net sellers in equity and debt segments both. In equity segment, the gross buying was of Rs 4459.97 crore against gross sell of Rs 6685.68 crore, while in the debt segment, the gross purchase was of Rs 1648.16 crore with gross sales of Rs 1708.44 crore. Besides, in the hybrid segment, there was no buying and selling.

The U.S. markets edged higher on Friday, as traders reacted positively to news that lawmakers managed to end a brief government shutdown with a bill raising spending caps and funding the government until March 23rd. Asian markets were trading mostly in green, following a late Friday rally on Wall Street and the worst week in years for many global stock benchmarks. Indian equity benchmarks ended sharply lower on Friday, proving Thursday's recovery short lived, as global equity markets continued to tumble on worries about rising inflation and higher interest rates. Today, the markets is likely to make optimistic start, taking support from firm global cues. Traders will take some encouragement with Reserve Bank of India (RBI) Governor Urjit Patel's statement that stock market bubble will not cause any major problem. He also said transmission of RBI decisions by banks have improved now, partly aided by demonetisation. Some support will also come on report that India's external debt has remained within manageable limits as indicated by the external debt indicators, and the country is not among the world's top debtors. India's external debt stock stood at $495.7 billion at quarter ending September 2017. Traders will also be getting some support with private report that retail inflation is expected to moderate and print at 5 per cent after rising consecutively for five months, helped largely by seasonal dip in vegetable prices, while trade deficit is also likely to improve, in January. There will be buzz in banking sector stocks on report that gross non-performing assets (NPAs) of banks declined marginally to 9.8 per cent at the end of September 30, 2017 from 10 per cent as on June 30, 2017. Infrastructure related stocks will be in focus on report that the Centre has released nearly Rs 9,940 crore to the states so far for the Smart Cities Mission, with Maharashtra accounting for the highest amount of Rs 1,378 crore, followed by Madhya Pradesh getting Rs 984 crore. 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

• Dr. Reddy's Laboratories has initiated voluntary recall of over 80,000 bottles of its drug Atorvastatin Calcium Tablets 10mg, 20mg and 40mg from the US market due to quality concerns. 
• NTPC has invited bids for procuring 1,000 MT of agro residue based fuel per day as part of the eco-friendly drive in the NCR. 
• Coal India's sales to power sector stood at 371.8 MT of coal in the last 10 months ending January, showing an increase of 6.8% compared to the corresponding period last year. 
• Mahindra & Mahindra has launched its electric vehicle range in Uttar Pradesh.