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Informist, Friday, Jan. 24, 2025

By Akash Mandal

MUMBAI – Sentiment on the stock markets is expected to be weak amid lukewarm earnings and expectations of an underwhelming Union Budget, analysts said. Any gains in the Nifty 50 are unlikely to be sustained unless the benchmark index surpasses 23500 points, which looks increasingly unlikely, an analyst said.

ICICI Bank, which will announce its quarterly earnings Saturday, will decide the course of banking stocks Monday. While weakness is likely next week, the high volatility means analysts are unsure of the near-term direction. While one said the indices may see some bounce-back Monday after ending lower this week, another said corporate earnings due Saturday would affect market sentiment. Analysts also said stocks in the broader market would continue to face selling pressure.

The benchmark indices might see some gains Monday, with 23000 points acting as a "demand zone" where there may be some buying in select stocks, Brijesh Ail, head of technical and derivatives at IDBI Capital Markets & Securities, said. The Nifty 50 might test the 23500 points level Monday, but it is unlikely to breach it, Ail said. In case of a fall, the index will take support at 22800 points.

Meanwhile, Jatin Gedia, technical research analyst at Mirae Asset Sharekhan, said the direction of the indices would depend heavily on the earnings reported by index heavyweight ICICI Bank, due Saturday. "The chart shows me the Nifty 50 has bottomed out... the indices are oversold, but the gains are not sustaining, which is leading to confusion," Gedia said. 

The Nifty 50 ended at 23092.20 points Friday, down 113.15 points or 0.5%, and the BSE Sensex closed at 76190.46 points, down 329.92 points or 0.4%. The broader market indices underperformed the benchmarks, with the Nifty small- and mid-cap indices down 1.3-2.8%.

Small- and mid-cap stocks are likely to remain weak next week amid the dumping of cheap goods by China. This dumping is only likely to worsen in the backdrop of uncertainty regarding sanctions on China imposed by the US, Dhananjay Sinha, head of research at Systematix Institutional Equities, said. The losses incurred by mid- and small-cap stocks might also scare away retail investors, further weakening sentiment, Sinha said. On the upcoming Budget, he said capital expenditure by the government is unlikely to meet the market's expectations, and may instead moderate over the next 3–5 years. 

Another analyst at a domestic brokerage said the Budget will fall short of expectations. "The government has very little headroom (to increase capital expenditure)... from 2026, the eighth central pay commission will come into effect, which will increase the expenses of the government, which might come at the cost of capex," the analyst, who covers mid-cap and small-cap stocks, said. The seventh central pay commission cost the government almost INR 1 trillion, the analyst said.

Shares of JSW Steel will be in focus Monday after the company, after market hours, reported a consolidated net profit of INR 7.17 billion for the December quarter, beating analysts' estimate of INR 6.59 billion. Shares of Shriram Finance may react to the management's and brokerages' commentary after the company, during market hours, detailed its December quarter earnings. The non-banking financial services company reported a net profit of INR 35.70 billion, beating analysts' estimates of INR 23.99 billion by a wide margin. At the same time, Godrej Consumer Products and Torrent Pharma's consolidated net profit fell short of the Street's views. DLF also reported its earnings for the quarter after market hours.

NTPC, Macrotech Developers, Balkrishna Industries, IDFC FIRST Bank, and YES Bank will announce their quarterly earnings Saturday. Meanwhile, Coal India, Tata Steel, Adani Total Gas, Canara Bank, Union Bank, and Oil India will announce their results Monday. ACC, Federal Bank, Indraprastha Gas, and Petronet LNG will also be in focus ahead of their earnings.  End

Edited by Rajeev Pai

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