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many thanks Scrutinizer and All.
The given code works fine. Actually there was another problem the file did not have a newline. I had to fold that file and then use sed.

Hi All,

I have a text file that contains

I1SP2 *=*=Y=M=D001D

My requirement is to replace all occurrence of =* to =Z

expected o/p is I1SP2 *=Z=Y=M=D001D

I have tried with
sed...