A host of crucial events – the Union Budget, macroeconomic data announcements, quarterly earnings and global crises – will lead to an action-packed week for Indian equity markets.
This week is critical, not only for the equity market, but for the economy as a whole.
“We have the Union Budget scheduled for February 1 and we expect the government to continue with growth agenda, but with a roadmap for fiscal prudence. This week marks the beginning of a new month also and auto sales start pouring in from February 1,” said Ajit Mishra, vice president-research, Religare Broking.
“Besides, we have manufacturing and services PMI data also scheduled during the week.”
The Budget will set the tone for the domestic markets amid the global sell-off, Mishra said. “Volatility remains high during the budget week so participants should continue with a cautious stance.”
The week is going to be extremely volatile on the back of the Budget. However, the good part this time is that the market is heading to the budget on a very light note and there is a high probability of a post-budget rally, said Santosh Meena, head of research, Swastika Investmart.
“A similar trend was visible last year where the market witnessed a pre-budget sell-off and then there was a post-budget rally.”
Meena said global cues will also be very important – global markets are trying to digest the rising interest rate scenario and geopolitical uncertainties continue to be a concern.
“The rising dollar index and rising crude oil prices are other issues for emerging markets like India. We are in the middle of the Q3 earning session and so far earning session remains good while we have lots of important earnings lined up this week,” he said.
Last week, the domestic market followed global reactions of Fed policy meeting, Russia-Ukraine tension amid pre-budget jitters. In the holiday-shortened last week, the 30-share BSE benchmark plummeted 1,836.95 points or 3.11 per cent.
“While the US Fed outcome is now behind, several other factors including ongoing result season, Union Budget and Russia-Ukraine conflicts will keep the market volatility high this week as well,” said Siddhartha Khemka, head-retail research, Motilal Oswal Financial Services.
Vinod Nair, head of research, Geojit Financial Services, said the release of PMI data for January will be another key domestic data point for investors.