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HomeWeekly newsDalal Street's Agenda: Eyes on Interim Budget, Fed Developments, and Auto Sales...

Dalal Street’s Agenda: Eyes on Interim Budget, Fed Developments, and Auto Sales in the Week Ahead.

Dalal Street

Dalal Street

Analysts expect volatility to stay strong owing to earnings season and the February 1 Interim Budget, but Nifty 50 will rebound to 21,500 only if the banking index stabilizes.

In the last week of the month, investors will watch Q3FY24 data, Interim Budget 2024, US Federal Reserve policy verdict, foreign capital inflow, and other domestic and global indications.

Domestic equity benchmarks IT stocks drove Nifty 50 and Sensex to their lowest week since October 27, resulting in a second straight loss. Last holiday-truncated week, banking sector weakness drove the frontline indices down 1.3% each in the three sessions.

Domestic equities rose as Fed Chair Jerome Powell acknowledged the risks of delaying rate cuts on Wednesday, boosting expectations of a 25 basis points (bps) rate cut by March and rallying global stock markets.

Expect these factors in the next trading week.

3Q Earnings

Over 300 corporations will report profits next week. ITC, Bajaj Finance, L&T, Sun Pharma, Maruti Suzuki, Titan, and Adani Ports are noteworthy results to monitor.

NTPC, Adani Enterprises, Bharat Petroleum Corporation, Adani Total Gas, Cochin Shipyard, Dr. Reddy’s Laboratories, Piramal Pharma, Strides Pharma, Voltas, Bank of Baroda, and Dabur India will also report December quarter results.

Interim Budget

Finance Minister Nirmala Sitharaman will present the interim budget on February 1. The FM is expected to announce measures to stimulate consumption, implement manufacturing fairness reforms, strategically allocate infrastructure money, and focus on agriculture.

According to a Moneycontrol poll of 15 analysts, the finance ministry may use a nominal GDP growth of 10.5% for 2024-25 in its interim budget. The Street also expects capital investment to increase from Rs 10 lakh crore announced last time.

FOMC ruling

January 30-31 is the next FOMC meeting. Interest rates were fixed at 5.25-5.50 percent at the last FOMC meeting on December 12-13, 2023. The Fed indicated at least three rate decreases for 2024 as inflationary pressures fall.

Investors expect the FOMC to keep key interest rates at current levels. The Street will follow Fed head Jerome Powell’s comments after US GDP statistics beat expectations.

Primary market action

On January 30, EPACK Durable will list in mainboard IPOs. On January 31, Nova AgriTech will list its IPO. BLS E-services’ Rs 310 crore IPO opens January 30 and closes February 1.

Megatherm Induction, Harshdeep Hortico, Mayank Cattle Food, Baweja Studios, and Gabriel Pet Straps are SME IPOs opening on January 29 and 31.

January Car Sales

Auto sales statistics from February 1 will be watched by markets. December 2023 passenger vehicle sales rose 4.4% YoY. Maruti Suzuki India, the country’s largest carmaker, had sales drop in December 2023 compared to 2022. Hero Motocorp’s December sales declined 0.06 percent YoY.

FII flows

FIIs sold Rs 12,194.38 crore in shares, while DIIs bought Rs 9,701.96 crore. FIIs sold 35,778.08 crore in stocks in January, while DIIs bought 19,976.66 crore.

“As long as FIIs and DIIs fight, volatility will remain high… Concerns exist about rising US bond yields. Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services, stated the US 10-year yield is back at 4.18 percent from 3.8 percent, indicating a Fed rate drop in H2 2024.

The technical view

Technical analysts expect the trend to remain sideways between 21,300 and 21,500. “However, a decisive break above 21,500 could push the index to 21,700/22,000 soon,” said LKP Securities Senior Technical Analyst Rupak De.

The Bank Nifty dropped for a fourth week, but Vinay Rajani, CMT, senior technical and derivative analyst at HDFC Securities, thinks the fall from here would be limited because most of the negatives have been discounted.

“Below 200 DEMA, we see strong support coming in the range of 43,800-44,000, derived from the upward sloping trend line, which adjoins the weekly low of March 17, 2023, and October 27, 2023,” stated.

F&O Signals

According to options data, 21,300 is the key place to watch for the trend on either side in the coming week, 21,400 is an immediate hurdle for the Nifty 50, while 21,200 and 21,000 may operate as support zones.

On the Put side, the maximum open interest was at 21,300 strike, followed by 21,000 strike, 21,200 strike, and 21,300 strike, with meaningful writing at 21,300 strike.

The volatility has been rising for a third week, and intraday it climbed around 200-week EMA (about 16), which is important to watch. India VIX, the fear index, climbed 0.45% to 13.86 this week and roughly 10% in the past three.

Global cues (US Fed, BoE policy verdicts):

New monetary policy decisions by the US Federal Reserve and Bank of England (BoE) are expected to impact global interest rates in the coming weeks. The US Federal Reserve’s January 31 policy meeting may reveal interest rate reduction.

A surge in US bond yields, uneven Q3 profits, and rising international crude oil prices owing to West Asian tensions have investors nervous about the near term. Reduced chances of US rate cuts. Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd., said bets on a Fed rate cut at the March meeting had dropped from 76% to 41% in the past month.

Investors will also monitor US macro data, China pronouncements, and geopolitics. Global events, foreign investment patterns, US bond yields, rupee-dollar movement, and crude oil prices will also affect the market.

Global cues show US markets are strong and rising weekly. We are targeting the Dow Jones Industrial Average (DJIA) “39,000” mark with a firm foundation near 37,500-37,800, said Religare Broking Ltd. SVP-Technical Research Ajit Mishra.

Corporate Action:

Havells India, Siemens Ltd., Metro Brands, Mangalore Refinery & Petrochemicals Ltd. (MRPL), and others will trade ex-dividend next week, starting Monday, January 29. Some firms may trade ex-bonus and ex-split and purchase back shares next week.

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