Indian equity indices are likely to start the day on a positive note, buoyed by strong global trends. Investors will closely monitor forex reserves data, January's PMI Manufacturing and Services Flash reports, and Q3 earnings from major players like JSW Steel, DLF, IndiGo, and Godrej Consumer Products.

Key Highlights:

1. India's Global Leadership Potential in AI
Union Minister Ashwini Vaishnaw emphasized that India is set to achieve global leadership in artificial intelligence, building on its proven capabilities in IT services.

2. Decline in Rural Inflation
Retail inflation for farm and rural workers eased to 5.01% and 5.05%, respectively, in December, down from 5.35% and 5.47% in November 2024, as per the labour ministry.

3. Indian Rupee's Weak Performance
According to Moody’s Ratings, the Indian rupee has depreciated by 20% over the last five years, marking it as one of the weakest currencies in South and Southeast Asia.

4. Positive Outlook for Banking Sector Stocks
Fitch Ratings projects a decline in Indian banks' gross non-performing assets (NPAs) by 40 basis points to 2.4% by March 2025, with a further drop of 20 basis points expected in the next fiscal year.

5. Auto Ancillary Sector Outlook
India Ratings and Research (Ind-Ra) maintained a neutral outlook for the auto ancillary sector for FY26, predicting 8-10% annual revenue growth.

Global Market Updates:

US markets closed higher on Thursday as investors evaluated corporate earnings and comments from former President Donald Trump, who advocated for interest rate cuts. Asian markets are trading in the green on Friday, ahead of the Bank of Japan's policy meeting. Notably, Japan’s core inflation hit a 16-month high of 3% in December, strengthening the case for a rate hike.

Domestic Market Performance:

Indian markets ended higher for the second consecutive session on Thursday, supported by robust buying in IT, Consumer Durables, and TECK sectors, amidst favorable global cues. The BSE Sensex gained 115.39 points (0.15%) to close at 76,520.38, while the CNX Nifty rose 50 points (0.22%) to settle at 23,205.35.

Other Market Drivers:

1. Strong Q3 Results Boost Investor Sentiment
Positive Q3 earnings from companies like Zensar Technologies, Coforge, Persistent Systems, and UltraTech Cement lifted the mood in IT and cement stocks.

2. FII Outflows Continue
Foreign Institutional Investors (FIIs) sold equities worth RS 4,026 crore on January 22, marking the 14th straight day of outflows.

3. Uncertainty Over US Trade Policy
Uncertainty regarding US trade tariffs continues to weigh on global markets, raising concerns about its impact on inflation and currency stability.

4. India’s Reputation as a Trusted Economy
Union Minister Ashwini Vaishnaw highlighted that India has emerged as the most trusted global destination amid worldwide disruptions, further boosting market sentiment.