RBI policy, Trump tariffs, Q3 earnings? With Budget behind us, what are the next big triggers for markets?

With the Union Budget behind us, the market's focus now turns to the next major catalysts—RBI's policy decision, Trump's tariff impact, Q3 FY25 earnings, and the Delhi elections.

With the Union Budget in the rear view mirror now, the market's attention has shifted to the next big triggers -- RBI's policy decision, Trump's tariff bomb, Q3 FY25 earnings, and the Delhi elections.

Will the central bank ease liquidity? Can India turn Trump's tariff tantrums into an opportunity? In addition, will the earnings season remain a stock-picker's playground? As investors brace for fresh volatility, here is what is expected to shape the road ahead.

1. RBI's Next Move

With the Union Budget behind us, all eyes are on the Reserve Bank of India's (RBI) February 5-7 policy meeting. The market is abuzz with speculation over potential monetary easing, especially given the ongoing liquidity crunch and the push to sustain economic momentum.

"We expect additional measures from the central bank to ensure stability in liquidity. Specifically, we anticipate a 50 basis point cut in the Cash Reserve Ratio (CRR) in the February MPC policy," said Murthy Nagarajan, Head of Fixed Income at Tata Asset Management.

Please include the link of the MC Poll of economists published today. You can include a para from the poll as well
The Budget's tax relief for salaried employees earning up to Rs 12 lakh per annum is expected to boost consumption, and an interest rate cut could amplify this trend. Utsav Verma, Head of Research – Institutional Equities at Choice International, echoed the sentiment that monetary easing could further boost consumption-driven sectors. "RBI had already taken liquidity measure last month and now the path seems set for interest rate cut which should further be positive for the these sectors," he said.

Also Read | MC Poll: RBI MPC likely to cut repo rate on Feb 7, say economists

2. Trump's Tariff Tantrums: Chaos or Opportunity?

US stocks took a hit on January 31 after the White House confirmed Trump's decision to impose 25 percent tariffs on Canadian and Mexican imports and 10 percent on Chinese goods. The move, long expected, has intensified concerns about inflation and economic growth. Analysts predict Trump's tariffs could inject more volatility into markets than any other factor.

Nomura estimates that the tariff's ripple effects could hit Asia and Europe and the global economic fallout may not spare India either.

Aishvarya Dadheech, Founder and CIO of Fident Asset Management, warned, "Not only could these tariffs crank up inflation, but they'd also throw a wrench into the Reserve Bank of India's plans for deeper rate cuts," he told Moneycontrol.

But not everyone is pessimistic. Ravi Diyora, Director of Research at Kunvarji Group, sees a silver lining. "With changing trade relations between the US, China, the European Union, and other countries like Mexico and Canada, India has an opportunity to strengthen its manufacturing base," he said.

3. Q3FY25 Earnings

The Q3FY25 earnings season has been a mixed bag. IT and banking have carried their momentum forward, while other sectors have yet to show a clear trend.

"For the rest of the earnings season, we expect a similar trend. It remains a stock-picker's market rather than one where a single sector dominates," Ajit Mishra, SVP Research at Religare Broking told Moneycontrol.

Among the standout performers, cement is showing signs of a turnaround, while banking remains a key driver with solid earnings. Select IT stocks are also benefiting from stability and rising BFSI demand.

"On the weaker side, FMCG struggled before the Budget, and some banking and NBFC stocks -- particularly those with higher exposure to microfinance -- have been under pressure. However, no sector is facing outright underperformance at this point," Mishra added.

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4. Delhi Elections

Finance Minister Nirmala Sitharaman’s move to exempt income up to Rs 12 lakh per annum from tax cannot not be seen as an attempt to woo the middle class ahead of the February 5 Delhi assembly elections. But will the polls truly impact the equity markets?

"I don't think the Delhi elections will impact the market in any significant way. There could be a knee-jerk positive reaction if the BJP wins, especially given the unexpected cut in income tax rates," said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services. ​

He emphasised that while a BJP victory may spark short-term optimism, long-term market trends will depend on global factors like Trump's tariffs and foreign institutional investor (FII) activity. FIIs sold Rs 87,374 crore worth of Indian equities in January alone.

"Despite these factors, valuation comfort is still lacking. Even after recent corrections, especially in mid- and small-cap stocks, valuations remain above historical levels. Economic growth and corporate earnings recovery will be crucial for market direction, and those will take time," Vijayakumar concluded.

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