Nifty, Sensex surge in Budget week; Q3 earnings, Fed meet to dictate trend

Follow our market blog to catch all the live action

According to analysts, the upcoming interim budget will keep the market on its toes this week. "The impact of the Union Budget on the equity market has reduced notably over the past few years, with the government undertaking most of the reforms outside the purview of the budget," said Pranav Haridasan, MD and CEO at Axis Securities.

"The market participants continue to view it as a critical catalyst stimulating the growth of the Indian economy and, thereby, the Indian market," he said.

Another critical event to watch is the outcome of the US Federal Reserve's policy meeting scheduled for January 31, which could provide insights into the potential timing of interest rate cuts.

Concurrently, ongoing Q3 earnings releases are contributing to substantial stock price movements, with numerous companies, including L&T, Bajaj Finserv, Maruti, Shree Cement, Titan slated to announce their results this week.

The Q3FY24 results seem to defy both numbers and narratives. Net profits of the Nifty-50 Index grew 18 percent, 4 percent above expectations, said Kotak Securities.

The brokerage believes that one will get a better sense of sustainability of the investment cycle in the next few days as companies in the capital goods sector report their earnings and give guidance on near-term order inflows, and the government presents its interim budget, which will give guidance on government capex for FY25.

According to analysts at Kotak, the market is either overestimating the market size and profitability in several sectors or underestimating ‘disruption’ risks in some sectors.

Foreign institutional investor activity remains a focal point, given their substantial net sales exceeding Rs 35,000 crore in the Indian equity market this month, said Santosh Meena, head of research at Swastika Investmart Ltd. Beyond domestic factors, the market will be influenced by the global landscape, including geopolitical developments and movements in US bond yields, the dollar index, and crude oil prices.

Also Read | Bajaj Finance Q3 Preview: NII to rise 26%, net profit to jump 25% on strong AUM growth

"Markets have bounced back strongly after the last two weeks of correction on the back on Reliance. Technically, 21,750 is a strong resistance for the Nifty around which we expect the current rally to cool off. Supports are placed at 21,137 and 20,870 on the downside," said Rahul Sharma, director and head of technical and derivatives research at JM Financial Services Ltd.

For Bank Nifty, sustaining above 200-DMA of 44,500 may trigger a short-covering bounce, targeting crucial supply zones at 46,000–46,300 for strength. However, breaching the 200-DMA could lead to additional weakness, potentially extending towards the 43,300 level, said Santosh Meena

Disclosure: Moneycontrol is a part of the Network18 group. Network18 is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.