Sensex, Nifty Extend Gains Ahead of Budget 2025
Indian equity markets extended their gains for a third consecutive day on January 30, driven by advances in financial services and oil & gas stocks. With global market cues mixed and the U.S. Federal Reserve's decision to keep interest rates steady, investors have shifted their focus to the Union Budget 2025, set to be unveiled on February 1. Analysts expect that measures announced in the Budget could stimulate economic growth while balancing fiscal discipline. This anticipation is likely to fuel market movements in the days ahead.
At 11:44 AM, the Sensex was up 161 points or 0.2 percent at 76,694, and the Nifty was up 77 points or 0.3 percent at 23,240. A total of 2,249 stocks advanced, 1,105 declined, and 110 remained unchanged. Despite these gains, both indices have dropped nearly 2 percent for the month of January, which is on track to mark their longest monthly losing streak in 23 years. The indices are still about 11.5 percent below their record highs from September 27, 2024.
The expiry of January futures and options contracts today is expected to add volatility to the markets, with traders rolling over their positions to the next month. This could lead to fluctuations as participants adjust their strategies.
“The recovery in the market is healthy since it is being led by fairly valued large-cap stocks. The rally can sustain if the Union Budget includes strong growth-stimulating measures that improve market sentiment”, said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services. “However, a sustained rally will only be possible if the FII (Foreign Institutional Investor) selling stops and we get leading indicators suggesting growth and earnings recovery”, he added.
Heavy redemptions pulled significant capital from Indian equities in January from foreign investors by selling Rs 81,600 crore of the Indian stocks so far. Such a level comes second highest at a time; U.S. Treasury yields refuse to give space, while earning reports were almost weak.
Global markets, including those in the U.S. and Asia-Pacific, displayed mixed movements after the Federal Reserve held interest rates steady at 4.25-4.5 percent. Fed Chair Jerome Powell indicated that future rate cuts would be data-dependent, with the central bank emphasizing the need for substantial progress on inflation and labor market conditions before making any decisions.
In India, the broader market saw a retreat from its highs. The BSE Midcap index rose by 0.4 percent, and the BSE Smallcap index gained 0.7 percent, reflecting positive but cautious sentiment. Among the major gainers on the Nifty 50 were Power Grid, Bajaj Finance, ONGC, Cipla, and Bharat Electronics, each advancing by 2-3 percent. Conversely, Tata Motors, Infosys, Shriram Finance, UltraTech Cement, and ICICI Bank were among the biggest losers, with declines ranging from 0.5-6 percent.
Non-bank lender Bajaj Finance saw a 3 percent rise in its shares, leading the financial services index after reporting a larger-than-expected quarterly profit, driven by strong loan growth. In contrast, Tata Motors' shares plunged by 6 percent following a smaller-than-expected quarterly profit, hindered by weak car sales during the period.
In individual stock movements, Whirlpool of India saw a dramatic 20 percent drop in its shares after its parent company, Whirlpool Corp, announced plans to reduce its stake in the Indian unit from 51 percent to 20 percent. Meanwhile, Brigade Enterprises gained 2 percent following an increase in its December-quarter profits, which were boosted by strong demand for luxury homes in India’s real estate market.
The markets are also waiting for quarterly earnings of several key firms today, including Adani Enterprises, Larsen & Toubro, Adani Ports, Bajaj Finserv, and GAIL India. Further insight into the health of the economy and corporate performance may be provided by the earnings reports, adding extra volatility to the stock market.
There are global markets looking at a big ECB policy decision; analysts have a 25-basis-point reduction in the deposit rate expected from the European Central Bank, and this would potentially influence the liquidity and interest rates globally. The Indian equity space is seeing complexities.
Hardik Matalia, Derivative Analyst at Choice Broking, noted that the Nifty could face resistance at 23,250, with a significant hurdle at 23,400. On the downside, if selling pressure persists, Nifty may find support in the 23,000-22,800 range, and if this level is breached, the decline could extend toward the 22,500-22,000 zone.
“Given the prevailing volatility, traders are advised to exercise caution, implement strict stop-loss strategies, and avoid carrying long positions overnight to effectively manage risk”, Matalia cautioned.
As the market digests global cues and prepares for the Union Budget, investors remain hopeful that key policy announcements will help drive growth and optimism, potentially providing a much-needed catalyst for a market rebound.
