Moreover, the trading activities of foreign investors, rupee-dollar trend and global trade-related developments would also impact trading in the markets, experts said.The Union Budget will be presented by Finance Minister Nirmala Sitharaman on February 1. The NSE and BSE will trade live on Sunday, February 1, when the Budget will be presented.
“This week is packed with key domestic and global triggers. On the domestic front, markets will monitor industrial production data, government budget-related fiscal indicators and weekly foreign exchange reserves.
“The earnings season will also gain momentum, with key results from heavyweights like Axis Bank, L&T, Maruti Suzuki, ITC, NTPC and Bajaj Auto,” said Ajit Mishra – SVP, Research, Religare Broking Ltd.
Globally, the focus will continue to be on key US macroeconomic data and, more importantly, the US Federal Reserve’s interest rate decision, along with ongoing developments in global trade policy and central bank commentary, he added. The rupee hit an all-time low of $92 on Friday.
“FPIs not only continued their selling spree in the week ended January 23, but also increased the intensity of their selling. Sentiment remained very weak due to a combination of factors such as the continued depreciation of the rupee, lack of any finality on the US-India trade deal and unimpressive third quarter results so far, which do not indicate a recovery in corporate earnings,” said VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited.
The global stock market trends and crude oil movements would also be followed by investors.
“The upcoming truncated week, truncated by the Republic Day on Monday, heralds a critical phase. Trade will resume on Tuesday with a potentially positive trigger from developments around the India-EU FTA scheduled for January 27. However, geopolitical uncertainties regarding Iran and Greenland remain significant headwinds,” said Santosh Meena, head of research at Swastika Investmart Ltd.
With global triggers previously taking center stage, the narrative is now expected to shift to the Union Budget. Markets will look for growth-oriented measures to revive domestic and global investor sentiment, he said.
“As markets enter the pre-Budget and monthly derivatives expiration week, a mild technical rebound cannot be ruled out. Increased FII shorts, oversold momentum indicators and pre-Budget positioning could trigger bouts of short covering,” said Ponmudi R, CEO of Enrich Money, an online trading and wealth technology company.
He further said that investors’ expectations regarding the Union Budget are based on cautious fiscal policy, with the fiscal deficit at around 4.2 to 4.3 percent of GDP, besides continued pressure on capital expenditure, especially in infrastructure, defense and railways.
“Markets are also factoring in modest tax rationalization, targeted sectoral stimulus and policy measures to support MSMEs and export-oriented sectors in the face of tariff-related challenges. Reforms aimed at improving capital market depth and efficiency are also prominent on investors’ wish list as participants look for policy clarity to anchor sentiment in an uncertain global backdrop,” Ponmudi said.
Last week, the benchmark BSE fell 2,032.65 points or 2.43 percent, and the NSE Nifty fell 645.7 points or 2.51 percent.
Weak global cues, continued foreign currency outflows, a depreciating rupee and subdued corporate earnings kept pressure on last week, said Mishra of Religare Broking Ltd.
Sachin Neema, fund manager at Garud Investment Managers, said while the current earnings season has been a mixed bag so far, all eyes will be on the FM’s Budget speech on February 1 and its sector proposals, given the delay in the US-India trade deal and the falling rupee.
“Alongside the budget calculations, the Union Budget is expected to continue to focus on supporting MSMEs facing tariff-related external pressures, pursue further rationalization of customs duties, continue to emphasize on capital expenditure and explore measures to boost job creation,” Namrata Mittal, CFA, chief economist, SBI Mutual Fund, said on the budget expectations.
Provided there are no major fiscal shocks, the stock market is likely to see only a limited impact from this year’s budget, Mittal added.
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