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Below is the Weekly Market Note By Mr. Ajit Mishra, VP - Research, Religare Broking Ltd

Markets managed to post decent gains in the Union Budget week, after sliding for two weeks. Supportive global cues, as well as growth-oriented budget announcements, aided sentiments however profit-taking in the final sessions marginally trimmed the gains. Finally, both the benchmark indices, Sensex and Nifty, ended with gains of ~2.5% each. Most sectors contributed to the move wherein banking, metal and healthcare were among the top gainers. The broader indices traded in tandem with the benchmark and ended in the positive range of 2.3-2.6%.

Among the important events, participants will be closely eyeing the MPC’s monetary policy review meet next week and its outcome is scheduled on Feb 9. With the timeline set by the US Fed for tightening, it would be crucial to see how the MPC responds to it especially when the government has set the growth agenda in the Union Budget. Besides, on the macro front, IIP data will be released on Feb 11.

The earnings season has been a mixed bag so far wherein sectors like IT, selected private banking and auto have seen decent performance while consumer-driven sectors like FMCG, consumer durables and pharma have posted a muted show. We have some big names like Bharti Airtel,  Jindal Steel, ACC, Hero Motocorp, Tata Power, Hindalco and M&M  will announce their numbers during the week along with several others.

Markets have been witnessing volatile swings, mirroring their global counterparts and it may continue in near future. Besides, the upcoming event i.e. MPC’s monetary policy review and earnings would further add to the choppiness. We have been seeing consolidation in the index for the last 3 months and indications are in the favour of prevailing bias to extend. We thus recommend focusing on sector-specific opportunities while keeping a check on leveraged positions. On the benchmark front, Nifty may find support at 17,350 and 17,000 levels in case the profit taking continues while the 17,850-18,000 zone would act as a hurdle.

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