The bearish trend continued on Dalal Street, with benchmark indices declining for the third consecutive week ending January 24. Persistent foreign investor selling, coupled with uncertainty surrounding global economic policies, maintained pressure on the markets. Falling oil prices and earnings in line with expectations failed to provide significant support.
The upcoming week (January 27–February 1) is expected to be eventful, featuring major developments such as the Union Budget 2025, the Federal Reserve’s policy meeting, US GDP data for Q4 2024, and the European Central Bank’s meeting. These events are likely to drive market movements as participants anticipate volatility amid consolidation.
Market Performance Overview
During the week, the Nifty 50 slipped by 111 points (0.5%) to close at 23,092, while the BSE Sensex dropped 429 points (0.56%) to end at 76,190. Broader market indices faced sharper declines, with the Nifty Midcap 100 falling 2.5% and the Smallcap 100 index dropping 4%, though both indices managed to hold above the previous week’s lows.
Experts suggest the market is in the final stages of consolidation, with long-term economic fundamentals providing some support. However, volatility is likely to persist in the near term due to ongoing uncertainties.
Key Factors to Watch
- Union Budget 2025
All eyes are on the Union Budget, expected to address weak domestic demand and a depreciating rupee while maintaining fiscal prudence. The fiscal deficit is projected at 4.7–4.8% of GDP for FY25, with an emphasis on capital expenditure, agriculture investment, and modest subsidy increases. Tax reforms and customs duty adjustments will also be closely watched. - Corporate Earnings
The quarterly earnings season intensifies with over 500 companies announcing results next week. Major firms across sectors, including manufacturing, financial services, and pharmaceuticals, are set to release their performance reports, providing key insights into economic trends. - Domestic Economic Data
Data releases include fiscal deficit numbers, infrastructure output for December, and foreign exchange reserves. The rupee has shown signs of recovery, snapping an 11-week losing streak, and is likely to remain under focus. - Global Economic Events
The Federal Reserve’s meeting, US GDP growth estimates, and the European Central Bank’s monetary policy decisions are crucial international events. Market participants will also monitor the Bank of Japan’s policy minutes and US economic indicators, such as job data and consumer spending figures. - FII Activity
Foreign institutional investors have been net sellers, offloading ₹22,500 crore worth of shares last week, bringing the total outflows in January to ₹69,080 crore. Domestic institutional investors have largely offset this, purchasing ₹66,945 crore in shares. The movements of these players will remain critical in shaping market sentiment. - IPO Activity
In the primary market, two new IPOs are set to open for subscription: a ₹3,027-crore offering in the mainboard segment and a ₹26-crore issue in the SME segment. Several companies are also scheduled for listing next week. - Technical Outlook
The Nifty 50 remains range-bound between 23,000 and 23,400, forming bearish patterns on weekly charts. Breaking below 23,000 could lead to further declines to 22,600, while a decisive move above 23,400 may push the index towards 23,600–24,000 levels. - F&O Expiry
The upcoming monthly F&O contract expiry is expected to add volatility. According to options data, the Nifty is likely to trade within a broad range of 22,000–24,000, with immediate resistance at 23,500 and support at 22,800. - Volatility Index
The India VIX, a measure of market volatility, rose 6.33% to 16.75, marking its highest level since June 2024. This increase in volatility reflects cautious sentiment among market participants. - Sectoral Trends
Stocks linked to public sector undertakings, capital expenditure, and infrastructure are expected to be in focus ahead of the budget. IT and select financial stocks may see buying interest based on earnings expectations.
With these key factors in play, the coming week is likely to witness heightened activity across markets, with significant implications for investors and traders.
