Weak Ahead: RBI Policy, Q3 earnings, FII activity among key market triggers for Nifty | Stock Market News

Indian markets closed the special Budget Day trading session on February 1 with little movement, as investors responded negatively to the Union Budget 2025’s capital expenditure figures. The budget announced a 9% year-on-year increase in capex for FY26, which fell short of market expectations. Economists had anticipated a larger allocation, given concerns about India’s slowing economy.

The Nifty 50 ended slightly lower by 0.11% at 23,482, while the Sensex remained nearly unchanged at 77,505. The Nifty Smallcap 100 index edged up 0.12% to 16,560, while the Nifty Midcap 100 index declined 0.42%, closing at 53,486. Meanwhile, the Nifty Smallcap 100 index managed to stay positive, rising 0.41% to settle at 16,979.

The Nifty FMCG index closed the session with a 3% gain, while the Nifty Consumer Durables and Nifty Auto indices also advanced, rising by 3% and 1.2%, respectively.

The Union Budget 2025 delivered unexpected announcements regarding capital expenditure and income tax. As anticipated, the government focused on addressing declining consumption, especially in urban areas. To stimulate spending, Finance Minister Nirmala Sitharaman declared that incomes up to ₹12 lakh would be exempt from income tax.

“The domestic benchmark index, Nifty, opened positively, saw buying interest in the first half, but witnessed heavy volatility post-union budget and settled flat to negative at 23,482. The volatility index, India VIX, cooled off by 13.24% to 14.10, indicating reduced market volatility.

Technically, Nifty defended its 21-Days Simple Moving Average (21-DSMA) support and formed a small red candle, with 21-DSMA around 23,280 acting as immediate support, while 23,640 and 23,800 serve as short-term resistance levels. As long as the index holds 23,280, traders are advised to follow a buy-on-dips strategy.

Similarly, Bank Nifty opened flat, showed buying interest in the first half but failed to sustain higher levels, closing flat to negative at 49,507. Bank Nifty formed a small red candle on the daily chart with long shadows on either side, indicating uncertainty. On the upside, 50,010 will act as resistance, and a breakout above this level could extend the upmove to 50,500. On the downside, today’s low of 48,925 will act as key support,” said Hrishikesh Yedve, AVP Technical and Derivatives Research at Asit C. Mehta Investment Interrmediates Ltd.

Here are the key triggers for stock markets in the coming week:

RBI Policy

The Reserve Bank of India’s (RBI) rate-setting committee is scheduled to meet later this week (February 5-7), with analysts largely anticipating the central bank to introduce rate cuts—the first in over four years.

In recent days, the RBI has infused significant liquidity into the banking system, leading some economists to believe that a rate cut is likely, despite persistently high inflation.

This will be the first monetary policy meeting led by Governor Sanjay Malhotra, a former civil servant who was appointed in late last year.

Budget Reaction

Although the markets ended flat, the effects of the Budget announcements are expected to persist throughout the week. Analysts believe this will reflect in sectoral trends and stock-specific movements. The government’s decision to remove tax on income up to ₹12 lakh under the new tax regime aims to boost consumption, benefiting sectors like FMCG, auto, and others.

Q3 earnings

A total of 748 companies are set to release their quarterly earnings this week. Notable ones to watch include Asian Paints, Titan, Airtel, Power Grid, Divi’s Labs, Tata Power, Torrent Power, Info Edge, Swiggy, SBI, ITC, Trent, Britannia, LIC, M&M, NHPC, Oil India, and others.

IPOs next week

The primary market will take a breather next week as no new initial public offerings (IPOs) are set to open in the mainboard segment.

Chamunda Electricals, Ken Enterprises, Amwill Healthcare are among five new IPOs which are scheduled to open next week in the SME segment.

Apart from new issues, the market will witness listing of Dr Agarwal’s Health Care Limited on February 5.

FII/DII Activity

The Foreign institutional investors (FIIs) remained net sellers on January 31, as they sold equities worth ₹1,188.99 crore, while domestic institutional investors purchased equities worth ₹2,232.22 crore on the same day.

In January 2025, foreign institutional investors (FIIs) offloaded Indian stocks worth ₹72,676 crore, making them net sellers in three of the last four months.

Global cues

U.S. stocks ended lower on Friday, with the S&P 500 falling 4% over the past week, its sharpest decline in four months. Significant losses in chipmakers such as Nvidia, Micron Technology, and Broadcom dragged the index down.

Meanwhile, global investors are closely monitoring tariff discussions from Donald Trump after the White House reiterated its intention to impose new tariffs on Mexico, Canada, and China.

Crude Oil Prices

Oil prices ended the week lower as investors awaited the results of President Trump’s tariff threats. Trump has warned that he will impose a 25% tariff on Canadian and Mexican exports to the U.S. unless the two countries take stronger action against fentanyl shipments and illegal migration across U.S. borders.

“Crude oil prices were traded steady in the international markets amid mixed global cues. Higher U.S. oil stocks and disappointing U.S. pending home sales and advance GDP data restricted gains but ECB rate cuts supported prices at lower levels. Crude oil prices settled at its lowest levels in January month. However, the ECB cuts interest rates to support its economy and also supported crude oil prices at lower levels. We expect crude oil prices to remain volatile in today’s session. Crude oil is having support at $72.40-71.80 and resistance is at $73.50-74.10 today’s session. In INR crude oil has support at ₹6,280-6,230 while resistance at ₹6,390-6,450,” said Rahul Kalantri, VP Commodities, Mehta Equities Ltd.

Technical View

The Nifty has experienced significant fluctuations throughout the Budget session. Analysts point out that a small-bodied candle has appeared on the daily chart, suggesting a sense of indecision in the market.

“Nifty has support at 23,280, and as long as it remains above this level, the trend might stay positive. On the higher end, the index could move towards 23,700–24,000 in the short term. However, a fall below 23,280 might trigger panic in the market,” said Rupak De, Senior Technical Analyst at LKP Securities.

Disclaimer: The views and recommendations provided in this analysis are those of individual analysts or broking companies, not Mint. We strongly advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and individual circumstances may vary.