The equity markets will be closed on Monday (January 26) in observance of Republic Day.
In addition, trading patterns of foreign investors, the rupee-dollar exchange rate, and global trade developments are expected to impact market activity, experts highlighted.
Finance Minister Nirmala Sitharaman will present the Union Budget on February 1, during which the NSE and BSE will conduct live trading.
“This week is filled with crucial domestic and international developments. Domestically, the markets will monitor industrial production data, fiscal indicators related to the budget, and weekly foreign exchange reserves.
“The earnings season will be gathering pace, featuring important results from major players like Axis Bank, L&T, Maruti Suzuki, ITC, NTPC, and Bajaj Auto,” said Ajit Mishra, SVP of Research at Religare Broking Ltd.
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On a global scale, attention will be directed towards significant macroeconomic data from the US and the Federal Reserve’s interest rate announcement, alongside evolving global trade policies and central bank statements, he added.
The rupee reached a historic low of 92-a-dollar on Friday (January 23).
“Foreign portfolio investors not only continued their selling trend in the week ending January 23 but also intensified their offloading. Market sentiment remained weak due to several factors, including ongoing rupee depreciation, uncertainty surrounding the US-India trade deal, and disappointing Q3 results thus far, which fail to indicate any improvement in corporate earnings,” stated VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited.
Investors will also keep an eye on trends in global equity markets and movements in crude oil prices.
“The upcoming week, shortened by the Republic Day holiday, marks the beginning of a crucial period. Trading will resume on Tuesday, potentially buoyed by positive developments related to the India-EU FTA on January 27. However, geopolitical uncertainties involving Iran and Greenland pose notable challenges,” commented Santosh Meena, Head of Research at Swastika Investmart Ltd.
As global factors previously dominated the narrative, attention is now shifting toward the Union Budget. Markets will be looking for growth-oriented measures to enhance domestic and international investor sentiment, he noted.
“As markets approach the pre-Budget phase and the monthly derivatives expiry week, a slight technical rebound cannot be discounted. High FII short positions, oversold momentum indicators, and pre-Budget strategies may trigger bouts of short-covering,” asserted Ponmudi R, CEO of Enrich Money, an online trading and wealth tech firm.
He further indicated that investor expectations from the Union Budget revolve around fiscal discipline, with a fiscal deficit projected at around 4.2–4.3% of GDP, and an ongoing focus on capital expenditure, especially in infrastructure, defense, and railways.
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“Market participants are also anticipating modest tax rationalization, targeted incentives for certain sectors, and policy measures to support MSMEs and export-oriented industries, considering tariff-related challenges. Reforms aimed at enhancing the depth and efficiency of capital markets are also high on the investor agenda, as stakeholders seek policy clarity to boost sentiment amid a volatile global environment,” Ponmudi explained.
Last week, the BSE benchmark fell by 2,032.65 points or 2.43%, while the NSE Nifty dropped by 645.7 points or 2.51%.
Weak global signals, continuous FII outflows, a depreciating rupee, and lackluster corporate earnings kept pressure on the markets throughout last week, according to Mishra from Religare Broking Ltd.
Sachin Neema, Fund Manager at Garud Investment Managers, mentioned that although the ongoing earnings season has yielded mixed results so far, all eyes will be on the FM’s Budget speech on February 1 and its implications for various sectors in light of the delay in the US-India trade agreement and the falling rupee.
“Beyond the fiscal details, the Union Budget is anticipated to continue focusing on supporting MSMEs facing external pressures from tariffs, pursue further customs duty rationalization, maintain its dedication to capital expenditures, and consider measures to stimulate job creation,” remarked Namrata Mittal, CFA, Chief Economist at SBI Mutual Fund, regarding Budget expectations.
Provided there are no major tax surprises, the equity market is expected to experience limited impact from this year’s Budget, Mittal added.
