Stock Market Outlook For Budget 1 Feb 2025

Market Performance Overview

The Indian benchmark indices ended higher for the fourth consecutive session on January 31, with the Nifty closing above the 23,500 mark amid broad-based buying ahead of the Union Budget.

• Sensex: Up 740.76 points (0.97%) at 77,500.57

• Nifty: Up 258.90 points (1.11%) at 23,508.40

• Advance-Decline Ratio: 2635 shares advanced, 1131 shares declined, and 120 shares remained unchanged.

Technical Analysis

The Nifty has given a falling wedge breakout, indicating a short-term bullish reversal. Additionally, the index has moved above the 21-period EMA, reinforcing the positive momentum. The Relative Strength Index (RSI) supports a strong upward move in the market.

• Support Levels: 23,300 – 23,200

• Resistance Levels: 23,600 – 23,800

With the Union Budget announcement tomorrow, high volatility is expected. The undertone remains positive, with the downside protected at 23,400, while 23,740-23,860 is considered a strong resistance zone.

Key Market Drivers

• Economic Survey Highlights: Expectations of a pro-growth budget and prudent fiscal policy fueled optimism.

• Global Cues: Positive international markets and better-than-expected corporate results contributed to the bullish trend.

• Government Measures: Market expects tax reductions and job generation policies to boost consumption.

• Infrastructure Spending: A balanced approach to reducing fiscal deficit while continuing infrastructure investments could drive market sentiment further.

Sectoral Performance

Gainers:

• Capital Goods: +3.5%

• Auto: +3.0%

• Realty: +6.2%

• FMCG: +0.7%

• Power: +1.0%

Losers:

• IT: -1.9%

• Consumer Durables: -0.9%

• Metal: -0.5%

• Telecom: -2.5%

• Pharma: -2.3%

Top Nifty Gainers:

• Bharat Electronics (+8.2%)

• Hero MotoCorp (+7.9%)

• M&M (+7.4%)

• Tata Consumer

• Trent

• Nestle India

• L&T

Top Nifty Losers:

• HCL Tech (-3.9%)

• Sun Pharma (-3.8%)

• Tata Motors (-3.5%)

• Bharti Airtel

• ICICI Bank

• Bajaj Finserv

• Apollo Hospitals

• JSW Steel

Broader Market Performance

• Mid-cap Index: +0.3% (weekly gain)

• Small-cap Index: -0.7% (weekly loss)

• BSE Midcap & Smallcap: Gained nearly 2% each on January 31

Foreign and Domestic Institutional Activity

• Foreign Portfolio Investors (FPIs): Net sellers over the past five days.

• Domestic Institutional Investors (DIIs): Net buyers in the same period.

Global Market Update

• United States: The Federal Reserve maintained interest rates, highlighting inflation concerns.

• Europe: ECB cut interest rates by 25 bps, softening US bond yields.

• Germany: GDP declined by 0.2% in Q4 due to industrial sector weakness.

• China: Investors monitored AI firm DeepSeek after market disruptions.

• Trade Policies: Trump confirmed a 25% tariff on Mexican and Canadian imports, with uncertainty over oil imports.

Market Outlook

Equity markets received a boost following ECB's interest rate cut and strong global cues. Traders remain focused on the upcoming Union Budget, with expectations for economic stimulus measures, tax relief, and infrastructure spending.

With a strong bullish candle, the Index has confirmed its Falling Wedge Formation breakout, but volatility is expected due to the Union Budget announcement.

• Short-term Outlook: Positive bias with support at 23,400 and resistance at 23,740-23,860.

• Long-term Outlook: Dependent on budgetary measures, corporate earnings, and global economic trends.

Conclusion The last trading day of January witnessed significant gains across indices, fueled by optimism surrounding the Budget and strong global market trends. While the undertone remains bullish, market volatility is expected in the coming sessions as investors react to the fiscal policies outlined by the government.