Will markets snap out of bear grip in Budget week? Key trends to watch

Union Budget 2025

Finance Minister Nirmala Sitharaman is set present highly anticipated Union Budget on the last day of the week, i.e. February 1, which will be keenly watched by investors. The market will remain open on Saturday for special trading session for real-time reactions to policy announcements. The market participants will also keep an eye on the Economic Survey, which will be tabled in the Parliament on January 31, 2025.

“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 and a special trading session on that day for real-time reactions to policy announcements,” says Ajit Mishra–SVP, Research, Religare Broking Ltd.

U.S. Fed policy

Investors across the globe will keep an eye on the US Federal Reserve’s policy decision set to be announced this week, which will have impact on domestic as well as foreign equity market. The Fed policy meeting is scheduled for January 29, 2025, with the central bank widely expected to provide no immediate relief to the market, in the backdrop of the recent rise in inflation and the potential risks going ahead. Analysts expect the FOMC to maintain a hawkish stance and keep interest rate at 4.5%.

Q3 earnings, auto sales

Several big companies, including Tata Steel, Bajaj Auto, Maruti, Tata Motors, ONGC, Cipla, and IndusInd Bank, are set to unveil their earnings report this week, while auto companies will release their monthly sales figures on February 1.

On Monday, as many as 68 companies are set to announce their results and the list include state-owned Indian Oil Corporation (IOCL), Canara Bank, and Coal India, Tata Steel, Federal Bank, ACC, Bajaj Housing Finance, Dwarikesh Sugar, Federal Bank, Indraprastha Gas, L&T Foods, and Petronet.

Over the weekend, ICICI Bank, YES Bank, IDFC First Bank released their earnings report, so their stocks are likely to react on Monday.

Technical outlook

Last week, both the Nifty and Sensex breached their critical psychological levels of 23,000 and 76,000, respectively, before recovering slightly to end the week with marginal losses. The Nifty trades below critical support levels, including the horizontal zone and ascending trendline, as well as the 21 EMA, 55-week EMA, and the 200-day EMA, confirming a downtrend.

“The current technical structure supports a “sell on rise” strategy until the index sustains above 23,450. The market may target 22,850 and 22,600 on the downside. However, a breach above 24,450 could signal a potential recovery toward 23,750. Traders should remain cautious, as technical setups indicate a bearish bias persists,” says Puneet Singhania, Director at Master Trust Group.

Santosh Meena, Head of Research, Swastika Investmart, says the Nifty index has been consolidating in the range of 23,000–23,400 after a sharp sell-off, showing no clear signs of recovery. “A decisive move above the 20-day moving average (DMA) at 23,450 is required for any meaningful recovery. Beyond that, 23,850 and 24,200 are the next resistance levels. On the downside, 23,000–22,800 is an immediate support zone, with further supports at 22,500 and 21800 if the selling pressure continues.”

On the derivatives front, FIIs hold aggressive short positions in index futures, with a net short of 3 lakh contracts and 80% net short positions. This leaves room for a potential short-covering rally, which could bring sharp movements in the market, says Meena.

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