Dynamic Week for Indian Equity Markets: Budget's Influence on Directional Shift
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Synopsis
This report outlines the recent performance of the Indian stock markets, detailing the challenges faced by bulls and the implications of upcoming budget announcements. The Nifty index has faced consistent declines amidst geopolitical uncertainties, with market analysts predicting potential shifts in trend based on budget outcomes.
Key Takeaways
- Bulls struggled to recover amid geopolitical uncertainties.
- The Nifty index has declined for three consecutive weeks.
- Budget week is a key event that may influence market direction.
- Broader market indices faced heavy selling.
- Global economic developments have mixed impacts on local markets.
Mumbai, Jan 25 (NationPress) Bulls made numerous attempts to recover but the overall mood remained subdued as Nifty declined for the third week in a row amid geo-political tensions.
It was, nevertheless, an eventful week on both global and domestic fronts. Yet, despite these occurrences, there was no notable alteration in the price structure.
“Apart from Tuesday’s significant sell-off from elevated levels, the week exhibited erratic sessions, ultimately concluding with a slight decline of approximately half a percent, just below 23,100,” stated Rajesh Bhosale of Angel One.
While the broader markets faced pressure, the sell-off in the benchmark index showed indications of slowing down.
“This could signal a precursor as we near the budget week, a pivotal event that frequently establishes the market tone, either perpetuating the existing trend or indicating a reversal,” according to Bhosale.
Indian stock markets experienced volatility on Friday as selling pressure at higher levels affected the benchmark indices.
At the closing bell, the BSE Sensex stood at 76,190.46, down 329.92 points or 0.49 percent, while the Nifty 50 fell 113.15 points or 0.49 percent to close at 23,092.2.
Both indices achieved intra-day highs of 76,985.95 and 23,347.30, respectively, before losing momentum. Indian equities wrapped up a volatile session on a weak note as global optimism failed to uplift domestic markets.
According to Siddhartha Khemka of Motilal Oswal Financial Services Ltd, broader market indices faced substantial selling pressure this week, with Nifty midcap100 dropping 1.6 percent and Nifty smallcap100 plummeting 2.4 percent.
The FPIs divested equities worth Rs 5,463 crore on Friday, raising their cumulative outflows for the month to Rs 66,322 crore.
In global developments, the Bank of Japan raised interest rates by 25bps to 0.5 percent, marking its policy rate at its highest since 2008, in an effort to normalize its monetary policy.
“Conversely, the US' benchmark S&P 500 surged to a record high, while the other two indices gained for the fourth consecutive day after US President Donald Trump advocated for lower interest rates and reduced oil prices,” Khemka noted.
Market experts suggest that traders should monitor these levels closely and adapt their strategies accordingly.
“Within the midcap sector, we observed mixed results, with some days experiencing sharp sell-offs while others saw robust rallies. Such volatile movements and themes are likely to persist, necessitating that traders remain agile in their stock selection,” experts advised.
Domestic equities are anticipated to trade within a broad range with certain volatility amid the Q3 result season, the unfolding of US President Trump’s economic policies, and the Union Budget on Saturday (February 1).
PSU and capex-themed stocks such as railway, defense, and capital goods will be in the spotlight ahead of the Budget, experts indicated.
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