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Informist, Friday, Jan. 31, 2025

By Akash Mandal

MUMBAI – Gains in benchmark indices are likely to be capped Saturday amid selling pressure at higher levels as no major announcements are expected in the Union Budget 2025-26 (Apr-Mar). Finance Minister Nirmala Sitharaman will present the budget for FY26 from 1100 IST onwards. While the general direction of headline indices looks positive, a lot would depend on budget-specific triggers, analysts said. Analysts also said such triggers would lead to increased volatility in the market.

The equity market will remain open at its regular timing between 0915 IST and 1530 IST for a special session on Saturday.  

There seems to be a trend reversal in the market, and benchmark indices seem to have bottomed out, Jatin Gedia, technical research analyst at Mirae Asset Sharekhan, said. "The Nifty 50 has sustained over the 20-day moving average (of 23300 points) even when it has fallen intraday in the past few sessions...thus, this seems like a trend reversal," the analyst said. Gedia sees the index facing selling pressure at 23700 points, and taking support at 23300 points in case of a decline. 

Kshitija Salvi, technical analyst at IDBI Capital Markets & Securities, also has a similar view. "The market is expected to be volatile tomorrow, with an overall positive outlook," Salvi said. The key support for the index is 23,000 points, while resistance is seen near 23,800 points, the analyst said. On Friday, the Nifty 50 ended at 23508.40 points, up 258.90 points, or 1.1%, and the BSE Sensex closed at 77500.57 points, up 740.76 points, or 1%. The Nifty 50 closed above 23500 points after three weeks on Friday. 

Analysts expect a muted Union Budget, with no significant positive announcements from the government. However, there will also be no significant negative announcement affecting the market, which is a positive in itself, Purvi Mundhra, equity analyst, macro-strategy at Systematix Institutional Equities, said. Additionally, Mundhra said the market has already priced in the muted budget expected. 

The analyst also believes the government will focus on fiscal consolidation, similar to that in the previous few budgets. The focus on fiscal consolidation would mean the government may limit capital expenditure going forward, and it also makes the prospects of lower tax rates unlikley, Mundhra said. On potential steps the government might take to drive capital expenditure by corporates, the analyst said a change in strategy is needed, and the focus should be on reviving demand, which is the core problem. "Pre-Covid, the government introduced a slew of supply side measures in order to drive private capital expenditure...however, the constraint for corporates was slowing demand, which has intensified over the years, Mundhra said. 

However, the analyst believes there are green shoots of slow recovery visible in demand and discretionary spending. "Rural income has been going up in the past few months if you see the data...however, we would need to stay patient to see if the revival sustains, or if the growth is dependent on the doll-outs given by the government (various governmental schemes)," Mundhra said. 

Saturday will be a breather on the corporate earnings front, with none of the large-cap companies scheduled to report their December quarter earnings. Investors will, however, react to IndusInd Bank's earnings, which came in after market hours Friday. The bank reported a net profit of INR 14.01 billion for the quarter, comfortably beating analysts' estimate of INR 13.07 billion. Bandhan Bank, IRB Infrastructure Developers, LIC Housing Finance, and Poonawalla Fincorp also reported their Oct-Dec earnings post market hours. Meanwhile, Oil and Natural Gas Corp. will report its earnings for the quarter later in the day.  End

Edited by Deepshikha Bhardwaj

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