Nifty, Sensex stare at another bleak opening

Gift Nifty trading points to a negative opening on Monday, with the undertone remaining weak. Gift Nifty is ruling at 22,970 against the Nifty futures (Jan) value of 23,113.90 and (Feb) value of 23,246.65, signalling a gap-down opening of another 150 points.

The market is slightly relieved by the initial steps taken by the US President Donald Trump on the tariff front. The focus has now shifted to the upcoming Budget on Saturday. The ongoing result season is largely underwhelming, resulting in heavy selling, said analysts.

President Trump’s inaugural speech was heavy on rhetoric, pretty much in line with his speeches delivered on the campaign trail and as president-elect, said IFA Global Research. “Trump signed executive orders to declare an emergency at the southern border and withdraw from the Paris Climate Agreement and WHO. Most of these were expected. While tariffs were mentioned, there were no specifics. This has taken out the fear premium, and volatility across assets classes has subsided.  However, these are just initial days in Trump’s presidency and we expect the ride to be bumpy going forward,” it cautioned in a weekly newsletter.

The focus in the coming week will be on the Fed rate decision due on Wednesday, it further said. “The Fed is expected to keep rates unchanged. The market is pricing in 1.6 cuts by the Fed in 2025. The ECB policy is due on Thursday. It is likely to cut rates by 25bps. The market is pricing in 2.5 more cuts this year, apart from the one we are likely to see in the coming week,” it forecasted.

Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said: “FII selling through the exchanges has continued unabated. FIIs have been sellers on all but one day in January so far. This month, through 24th January, FII selling in equity in the cash market was Rs 66602 crore. (Source: NSDL). The sustained strengthening of the dollar and rise in the US bond yields have been the principal factors driving the FII selling.

“So long as the dollar index remains above 108 and the 10-year US bond yield remains above 4.5 per cent the selling is likely to continue. Since the bulk of the FII assets under management is in financials, this segment has been bearing the brunt of FII selling. It has witnessed some buying in the wake of improved prospects for the sector and the positive management commentary,” he said, adding going forward, “the IT segment is likely to witness buying.”

Ajit Mishra – SVP, Research, Religare Broking Ltd, summed up the expectation by saying: 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,” he added.