Hope and anxiety loom as Budget is 5 days away

Concerns remain the dominant factor, with fears that the market could dip below critical support levels.

Updated on:

27 Jan 2025, 11:55 am

5 min read

The market is poised to start trading today with a mix of hope and apprehension, as the Union Budget looms this weekend. Concerns remain the dominant factor, with fears that the market could dip below critical support levels. Additionally, the decline in US futures is expected to exert downward pressure on the Indian market.

So far, company sales and profits have shown only modest growth. The results expected this week also do not inspire optimism. The futures market has seen a drop, driven by concerns that tech giants in the US will fail to meet growth expectations. There is also growing uncertainty regarding President Trump's next move.

The market will remain open for six days this week, as trading will take place on Saturday, the day of the budget announcement.

Global markets

In the derivatives market, the GIFT Nifty closed at 23,072.50 on Friday night, but dropped to 22,940 this morning. This suggests that the Indian market will open with a significant loss today. European markets ended Friday with slight losses. Telecom equipment manufacturer Ericsson reported a 12 percent drop in both sales and profit. However, Novo Nordisk’s shares surged 7 percent after a clinical trial showed positive results for its weight-loss drug. Meanwhile, Burberry saw its stock rise by 10 percent due to weaker-than-expected sales.

Despite strong gains earlier in the day, the US markets ended Friday with modest losses. However, the broader sentiment remains bullish for the week, with "Trump excitement" continuing for a second consecutive week. Several tech giants, including Nvidia and Tesla, fell on Friday, with Nvidia dropping by 3.12 percent and Tesla by 1.41 percent.

The Federal Reserve’s monetary policy committee will meet this week, with a decision expected on Thursday. The consensus is that there will be no rate cut this time around, following a 1 percent reduction last year. The market will be closely watching President Trump’s response if his pressure to cut interest rates fails.

Apple, Tesla, Meta, Microsoft, and other major companies will release their results this week, while US GDP figures, due on Friday, are also likely to influence market movements.

On Friday, the Dow Jones Industrial Average fell by 140.82 points (0.32%) to 44,424.25, the S&P 500 lost 17.47 points (0.29%) to 6,101.24, and the Nasdaq Composite dropped 99.38 points (0.50%) to 19,954.30.

US futures are currently showing a significant decline, with the Dow Jones down by 0.32%, the S&P 500 down by 0.73%, and the Nasdaq down by 1.39%.

The yield on US 10-year Treasury bonds fell to 4.58%.

Asian markets opened higher this morning. Japan's Nikkei rose by 0.50 percent, following the country’s decision to raise interest rates to a 16-year high. However, markets in South Korea and Australia are closed today.

Indian market

While IT and FMCG companies saw gains, the Indian market faced a significant downturn on Friday, with the major indices ending the week in the red. The Sensex fell by 0.56%, and the Nifty dropped 0.47% for the week. Persistent selling by foreign investors has hindered any bullish recovery.

Sectors such as real estate, pharmaceuticals, healthcare, oil & gas, media, automotive, banking, and consumer durables saw heavy losses on Friday. The midcap and smallcap indices experienced steep declines, falling by up to 2.35%.

On Friday, the Nifty closed at 23,092.20, down by 113.15 points (0.49%). The Sensex ended at 76,190.46, a decline of 329.92 points (0.43%). The Bank Nifty closed at 48,367.80, down by 221.20 points (0.46%). The Midcap index fell by 1.85%, while the Smallcap index dropped by 2.35%.

Foreign investors sold a net amount of ₹2,758.49 crore in the cash market on Friday, while domestic funds and financial institutions bought a net amount of ₹2,402.31 crore. Foreign sales have amounted to ₹69,080.14 crore so far this month.

Market sentiment has weakened significantly, with discussions shifting from the possibility of the Nifty reaching 23,400 to concerns over whether 22,800 or 22,600 will hold as support below the 23,000 mark. The expiry of F&O contracts on Thursday adds further uncertainty, with market reactions to Saturday's budget announcement expected during the special trading session.

The Nifty may find short-term support at 23,050 and 22,975 today, with resistance around 23,275 and 23,350.

A number of companies are due to announce their third-quarter results today, including Tata Steel, ACC, Railtel, Indian Oil, Federal Bank, Canara Bank, Union Bank, Coal India, Petronet LNG, Indraprastha Gas, Adani Total Gas, Adani Wilmar, New India Assurance, and Wonderla Holidays.

Company results

Among the results already announced, ICICI Bank reported a 9% increase in net interest income and a 14.8% rise in net profit for the third quarter. NTPC's net profit grew by only 3%, with revenue rising by 4.8%. Balakrishna Industries saw a 12.6% rise in revenue, and its net profit jumped by 47.2%, although profit margins fell slightly.

On the other hand, JK Cement reported a slight drop in revenue and a significant 33.2% drop in net profit. IDFC First Bank saw its net interest income jump by 14.4%, but net profit fell by 52.6%. Yes Bank’s net interest income rose by 10.2%, while profit jumped by 165%.

Among others, InterGlobe Aviation, which operates IndiGo, saw revenue grow by 13.7%, but its profit fell by 18.3%. JSW Steel faced a sharp 70.7% drop in profit despite a slight decline in revenue.

In terms of sector-specific news, KEC International announced that its total contract value had crossed ₹22,000 crore with the award of a ₹1,445 crore contract from Power Grid. The Ministry of Defence confirmed that the tender submitted by Mazagon Dock Shipbuilders, in collaboration with ThyssenKrupp Marine Systems, for the construction of six submarines had been accepted.

Gold price

Gold prices showed some upward movement into the weekend, rising by $17.86 per ounce to $2,771.60 on Friday. However, this morning, prices fell slightly to $2,764. Traders are expecting gold to surpass $2,800 per ounce and possibly break records this week.

The rupee strengthened on Friday, closing at ₹86.21, a 25-paise drop from the previous day. The rupee could face pressure again today.

Crude oil prices experienced a slight rise due to a reduction in the number of US drilling rigs. Brent crude was trading at $78.50, though it slipped by 1% this morning to $77.69. WTI crude stood at $73.86, while UAE Murban crude was at $81.03.

Cryptocurrencies saw a minor uptrend, with Bitcoin trading around $101,600 and Ether near $3,200.

Finally, gold, silver, and various industrial metals experienced mixed movements on Friday, with copper, aluminium, zinc, and tin all seeing slight gains, while nickel fell by 0.25%.