Week Ahead Budget 2025, Q3 Results, Us Fed Decision Among Key Market Triggers To Watch

Week ahead: Budget 2025, Q3 results, US Fed decision among key market triggers to watch

Budget 2025, US Fed, Q3 Results: Key Market Triggers Ahead

Markets extended their losing streak for the third consecutive week, consolidating broadly within the previous week’s range. The indices remained volatile amid mixed third-quarter earnings, persistent FII outflows, and policy announcements by U.S. President Donald Trump.

The NIFTY50 index declined by 0.4%, closing the week at 23,092, while the SENSEX dropped 0.5%, ending at 76,190. After a brief pause, broader markets resumed their downward trend, with the NIFTY Midcap 100 index falling 2.4% and the Smallcap 100 index losing over 4%.

The market witnessed a broad-based sell-off across sectors, with Real Estate (-9.1%) and Energy (-4.1%) recording the steepest declines. On the other hand, defensive sectors were the only gainers, with IT rising 3.5% and FMCG inching up 0.4%.

Index breadth

The breadth of the NIFTY50 index was subdued last week, with an average of only 27% of NIFTY50 stocks trading above their 50-day moving average (DMA). The breadth indicator, which measures the proportion of NIFTY50 stocks above their 50-DMA, continues to reflect weakness, currently standing at around 26%. This suggests that more than 70% of NIFTY50 stocks are trading below their respective 50-DMAs, reinforcing a bearish market sentiment.

As noted in our analysis over the past three weeks, the overall market trend is likely to stay under pressure unless the breadth indicator decisively surpasses the critical 50% mark.

WImage1.webp

FIIs positioning in the index

Foreign Institutional Investors (FIIs) sustained their bearish stance in index futures last week, with 80% of their positions tilted towards the short side, sustaining the long-to-short ratio of 20:80. This underscores the prevailing negative sentiment, as net open interest in index futures of FIIs remains at -3 lac contracts.

Market participants keeping an eye on this metric should remain vigilant for potential increase and decrease in the net open interest. A further increase in the long-to-short ratio could trigger sharp and unexpected market swings. To track this ratio, you can login https://pro.upstox.com/ ➡️F&O➡️FII-DII activity➡️FII Derivatives.

WImage2.webp

Meanwhile, the cash market activity of the FIIs maintained their downtrend and remained net sellers last week. The FIIs sold shares worth ₹22,504 crore and have largely remained net sellers in the month of January. On the other hand, the Domestic Institutional Investors (DIIs) remained net buyers and purchased equity worth ₹17,577 crore.

WImage3.webp

NIFTY50 outlook

The NIFTY50 index decisively closed the week below its 50-week exponential moving average (EMA) for the first time in nearly a year, signaling underlying weakness. Additionally, the index ended the week on a negative note, closing below last week’s doji candle, further reinforcing the prevailing bearish trend.

For the upcoming week, traders should closely monitor the support zone around 22,500. A decisive close below this level on the daily chart will indicate further weakness. Conversely, the 23,400 level is expected to act as a key resistance zone for the index.WImage4.webp

SENSEX outlook

The SENSEX also remained volatile throughout the week and ended below previous week’s low, signalling weakness as per the weekly chart. The index faced resistance around the high of the previous week’s doji candlestick pattern, indicating presence of sellers at higher levels.

The SENSEX also surrendered the 50 weekly EMA with a decisive close, forming a bearish candle on the weekly chart. For the upcoming week, traders can monitor the previous week’s high of 77,337. Unless the index breaks this level on a closing basis, the trend may remain weak. On the flip side, the next crucial support is around the 74,200 zone.WImage5.webp

🗓️Key events in focus: Globally, the investors will be closely monitoring the interest-rate decision from the U.S. Federal Reserve. The U.S. Fed will announce its policy decision on Wednesday. The central bank is widely expected to hold its key interest rate steady in the range of 4.25% to 4.50%. However, investors will keep an eye on the press conference of the Fed Chair Jerome Powell. This comes after the U.S. President Donald Trump in his virtual address at World Economic Forum said that the interest rates should be dropped immediately.

Meanwhile, on the domestic front the Finance Minister Nirmala Sitharaman will present the Union Budget on February 1. Industry stakeholders are eagerly anticipating whether the forthcoming budget will revive GDP growth and provide much-needed tax relief for salaried individuals? With GDP growth slowing to its lowest level in several quarters, the government is expected to prioritise economic recovery through Budget 2025.

📈📉Earnings blitz: The fourth-quarter earnings season in the U.S. kicks into high gear next week. Four of the market’s seven largest companies such as Microsoft, Meta Platforms and Tesla will report earnings on Wednesday, while Apple reports on Thursday.

Meanwhile, key companies which will declare their third quarter results on Dalal Street are ACC, Tata Steel, Indraprastha Gas, Federal Bank, Bajaj Auto, TVS Motor, Cipla, Tata Motors, Maruti Suzuki, Ambuja Cements, Kalyan Jewellers, Larsen & Toubro, BSE and Adani Enterprises.

📍Mark your calendars: The Indian stock markets will remain open for trading on Saturday, February 1, as Finance Minister Nirmala Sitharaman presents the Union Budget. Trading will follow the regular schedule, operating from 9:15 am to 3:30 pm.

📌Spotlight: This past week saw two significant developments. Firstly, Cyient, an IT services company, experienced a sharp 22% drop in its share price. This decline was triggered by the unexpected departure of the company’s CEO and growing concerns about the company’s future growth trajectory. Secondly, India’s foreign exchange reserves dipped to a 11-month low of $623 billion. The decline in reserves is primarily attributed to the Reserve Bank of India’s (RBI) interventions in the foreign exchange market to manage the rupee’s volatility against the strengthening U.S. dollar. The rupee weakened past the 86 level during this period, influenced by a rally in the dollar and anticipation of potential policy shifts under the U.S. presidency.

🛢️Oil: Crude prices snapped a four-week winning streak after US President Donald Trump announced plans to boost domestic crude oil production in the U.S. During his virtual speech at the World Economic Forum, he also called on the Organisation of the Petroleum Exporting Countries (OPEC) to lower crude oil prices as well. The Brent Crude slipped 2.8% and ended the week at $78 a barrel. On the other hand, the West Texas Intermediate (WTI) fell 3.8% to $75 a barrel.

📊Stocks in focus: Based on price and open interest, short build-up was seen in Cyient, Polycab, Sona Blw Precision, Trent and One 97 Communications (Paytm). Similarly, to track the OI and price gainers, log in to Upstox ➡️F&O➡️Futures smart list ➡️OI gainers.

📓✏️Takeaway: The NIFTY50 index continued its downward trajectory, closing below the doji candlestick pattern formed last week. This negative price action suggests that the index lacks both breadth and momentum.

Looking ahead, traders should closely monitor the resistance zone between 23,400 and 23,500. A failure to decisively break above this zone on a closing basis could signal a continuation of the bearish trend. Conversely, the crucial support level for the index now lies between 22,500 and 22,400

Read more latest news on NiftyNews

Leave a Reply

Your email address will not be published. Required fields are marked *

Back To Top