Mumbai, January 26: Indian markets are bracing for a pivotal week ahead, with key events like the Union Budget, macroeconomic data, Q3 earnings, and the US Fed policy decision set to influence market sentiment.
The upcoming week starting from Monday will be crucial for investors as Finance Minister Nirmala Sitharaman will set the direction of the economy through the Union Budget announcements 2025-26, although the announcements will be on Saturday, according to the market experts.
"The upcoming week holds significant importance, not just for the equity markets but for the economy as well, with the Union Budget scheduled for February 1 and a special trading session on that day for real-time reactions to policy announcements," said Ajit Mishra--SVP, Research, Religare Broking Ltd., observing the sentiment of the market.
He added that the market participants are hopeful for measures aimed at boosting the slowing economy and driving consumption, all while maintaining fiscal discipline.
Manish Goel, founder and MD, Equentis Wealth Advisory Services, said that the recent announcements of US President Donald of making America more accessible to businesses can impact stock markets around the world, including India.
"US President Trump encouraged businesses to set up production in the US to take advantage of low taxes while warning of tariffs on imports. He hinted at tariffs targeting Canada, Mexico, and China. For India, this could create opportunities to increase exports to the US, especially in sectors impacted by shifting trade patterns," Goel said.
"However, it may also pose challenges for Indian businesses depending on affordable imports or navigating more competitive global markets," he added.
In the upcoming week, earnings of several major companies, including Tata Steel, Bajaj Auto, Maruti, Tata Motors, ONGC, Cipla, and IndusInd Bank, will be on the market's radar.
On the global front, key events like the US FOMC meeting and statements from the US President will also influence market sentiment. Most expect no immediate action from the Fed, given the recent rise in inflation and the potential risks of further escalation.
In the last trading week, the markets extended their consolidation for a second consecutive week, losing nearly half a percent amid mixed signals.
Caution prevailed from the start, fueled by concerns over potential volatility in global markets ahead of Trump's inauguration, given his past remarks on trade tariffs and "America First" policies.
Mixed corporate earnings and persistent selling by FIIs further weighed on sentiment. Amid these factors, the benchmark indices, Nifty and Sensex, fluctuated sharply within a range before closing at 23,092.20 and 76,190.46, respectively.
On the sectoral front, most sectors faced pressure, with the realty index plummeting over 9 percent, followed by losses in energy and auto. However, a rebound in IT and FMCG helped limit the damage to the benchmarks. The broader markets saw intensified selling pressure, with midcap and smallcap indices declining between 2.5 percent and 4 percent.
Meanwhile, the domestic markets continued to be under the selling pressure due to the foreign selling.
According to data from the National Securities Depository Limited (NSDL), Foreign Portfolio Investors (FPIs) sold equities worth Rs 19,759 crore during the week from January 20 to January 24.
The data further revealed that in January alone, FPIs have pulled out Rs 64,156 crore from Indian markets.
From a technical perspective, the benchmarks remain vulnerable to further downside, with critical support in the 22,700-22,900 range for the Nifty, said experts. Any recovery will likely face strong resistance in the 23,450-23,650 zone, according to the experts.
