The Indian equity markets had an extended trading week with a special session held on Saturday, February 01, 2025, for the Union Budget. Despite the budget being a key trigger alongside earnings and global developments, the benchmark indices closed nearly flat on that day. However, for the week, Nifty gained 1.69%, while Bank Nifty rose 2.36%, supported by positive earnings updates and favourable global cues.
Bank Nifty outperformed as the RBI announced a Rs. 1.1 lakh crore liquidity injection through various measures. This includes open market purchases of Rs. 60,000 crore in three tranches, starting on January 30, and a Rs. 50,000 crore variable rate repo auction scheduled for February, 07. Additionally, a US$ 5 billion dollar-rupee swap auction was conducted on January 31.
Despite the recovery, both Nifty and Bank Nifty remain below their 200-day exponential moving averages.
Market Performance
Here's how the major indices fared:
Index | January 24, 2025 | February 01, 2025 | % Change |
Nifty | 23,092.2 | 23,482.15 | 1.96% |
Bank Nifty | 48,367.8 | 49,507.9 | 2.36% |
Midcap Nifty | 53.263.0 | 53,486.2 | 0.42% |
The Midcap index rebounded after a 3-4 week decline, closing in the green on all trading days except the day of the budget.
Sector Performance
On the sectoral front, the Realty index surged 11.59%, recovering from a sharp 9% decline the previous week.
The increased tax slabs announced in the budget, likely boosting consumer spending, lifted FMCG and Automobile stocks.
Nifty Pharma faced pressure from US tariffs but recovered quickly. Meanwhile, the IT sector was the worst performer, falling 3.43%.
Indices | Weekly Change (%) |
Nifty Realty | 11.59 |
Nifty Auto | 5.12 |
Nifty FMCG | 4.15 |
Nifty Financial Services | 2.92 |
Nifty Bank | 2.36 |
Nifty PSU Bank | 1.04 |
Nifty Energy | -0.27 |
Nifty Metal | -1.66 |
Nifty Media | -1.72 |
Nifty Select Midcap | -1.85 |
Nifty Pharma | -2.46 |
Nifty IT | -3.43 |
Weekly Top Gainers (Nifty 500)
Company | Weekly Gain (%) |
Sobha | 21.06 |
Inox Wind | 20.29 |
Macrotech Devlopers | 16.38 |
Zensar Technologies | 16.35 |
The Phoenix Mills | 16.32 |
Weekly Top Losers (Nifty 500)
Company | Weekly Loss (%) |
Whirlpool of India | -26.73 |
Anantraj Industries | -20.89 |
Apar Industries | -20.55 |
CAMS | -13.75 |
Vedant Fashions | -13.48 |
The gainers list was mainly from the Realty segment.
Amongst the losers, Whirlpool of India declined after the parent company Whirlpool Corporation announced plans to reduce its stake in Indian unit to about 20% (from the current 51%) by mid or late 2025. Anantraj was down on the back of impact form DeepSeek.
Liquidity Conditions
Indian equities witnessed consistent outflow of FIIs. In the past one week of the regular trading sessions, there was outflow of Rs 18,330 crore.
Even in the Budget special session FIIs turned net sellers to the tune of Rs 1,327 crore.
This now takes the FIIs selling to Rs 88,702 crore in January 2025 itself.
One must recollect, there has been consistent outflow of FIIs since 2021. DIIs have been net buyers in the week.
India Equity - Institutional Funds Flow (in Rs. crore)
Date | FII | DII |
January 27, 2025 | -5,051 | 6,642 |
January 28, 2025 | -4,921 | 6,814 |
January 29, 2025 | -2,586 | 1,793 |
January 30, 2025 | -4,583 | 2,166 |
January 31, 2025 | -1,189 | 2,232 |
Total | -18,330 | 19,647 |
All Eyes on Rate Cuts
In the US, the Federal Reserve kept interest rates steady, citing inflation concerns. Trump declared an economic emergency, imposing a 10% tariff on all imports from China and 25% on those from Mexico and Canada, with energy imports from Canada taxed at 10%.
In Europe, the ECB cut its main rate by 0.25% to 2.75%, while Germany's GDP contracted 0.2% in 4Q due to ongoing industrial weakness.
In Asia, markets reacted to news about Chinese AI firm DeepSeek, which suggested the possibility of cheaper AI models.
This week, the RBI Policy meeting is a key event, with markets eagerly awaiting a repo rate cut. While liquidity infusion has already been addressed, an actual rate cut is seen as crucial for further support.
Street expectations point to a 50 bps cut, but we anticipate a 25 bps reduction. This is expected to be the only rate cut in India for CY2025.
Technical Perspective
We believe the short-term market outlook remains bullish, but temporary overbought conditions could lead to range-bound movements in the near term.
Key support zones for Nifty and Sensex are the 20-day SMA at 23,270/77,000 and 23,100/76,500, while resistance levels are at the 50-day SMA, around 23,810/78,500 and 23,900/78,800.
For Bank Nifty, the bullish trend is expected to continue as long as it stays above the 20-day SMA of 49,000. On the upside, 50,250 and 50,500 will act as key resistance levels.
Strategy - Turn Volatility into Opportunity
The global news flow from the US and the Union Budget's positive impact on the Consumer sector are largely behind us, but volatility is expected to persist until the new income tax bill is introduced next week.
Markets are expected to remain volatile with a run-up to the RBI policy announcement, Delhi election results, and the new income tax policy. However, sectors like Real Estate, FMCG, and Consumption (especially urban) are expected to remain buoyant.
The earnings season is not over yet, so once the news-driven impact settles, earnings will take centre-stage again. It’s still a stock picker’s market, and there are emerging opportunities in the mid-cap segment.
Given the market volatility, it’s important not to rush in; and invest only when risk-reward turns favourable.
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