IGI Logo

Below the Quote on Weekly Market Analysis by Mr. Ajit Mishra – SVP, Research, Religare Broking Ltd.

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%, 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% and 4%.

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 (Saturday) and a special trading session on that day for real-time reactions to policy announcements. Market participants are hopeful for measures aimed at boosting the slowing economy and driving consumption, all while maintaining fiscal discipline. Additionally, several major companies, including Tata Steel, Bajaj Auto, Maruti, Tata Motors, ONGC, Cipla, and IndusInd Bank, are set to release their earnings during the week.

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.

From a technical perspective, the benchmarks remain vulnerable to further downside, with critical support in the 22,700-22,900 range for the Nifty. Any recovery will likely face strong resistance in the 23,450-23,650 zone. A notable concern is the disconnect between the benchmarks and the broader market, as selective buying in heavyweight stocks has cushioned the decline, while broader market stocks continue to face sharp corrections, eroding portfolio values. Amid this correction, certain pockets are displaying resilience. Traders are advised to adopt a stock-specific approach and consider hedged positions, given the upcoming events and heightened uncertainty.

Above views are of the author and not of the website kindly read disclaimer