<p>This week, domestic equities are expected to trade within a broad range with some volatility amidst the ongoing earnings season, unfolding of Donald Trump’s economic policies and the Union Budget on Saturday, February 1. It will be an extended week as the markets will be open that day, to allow traders to make bets based on Finance Minister Nirmala Sitharaman’s announcements.</p>.<p>The Q3 earnings so far have been mixed, inducing short term action on the stock/sectoral front. Several heavy-weight companies from major sectors like banking, auto, pharma will be announcing their results this week and provide future business outlook which will be closely tracked by the investors. PSU and capex themed stocks such as railway, defence, capital goods will be in focus ahead of the Budget.</p>.<p>On the macro front, key data to be released this week includes the United States Federal Reserve and the European Central Bank’s interest rate decisions, US Q4 GDP and China’s manufacturing PMI for January.</p>.<p>In the US markets, the benchmark S&P 500 rose to a record high after President Donald Trump called for lower interest rates and cheaper oil prices. Markets also cheered Trump’s artificial intelligence infrastructure investment plan.</p>.Rupee weakest performing currency in Southeast Asia: Moody's.<p>Trump’s remarks targeting BRICS nations, reiterating his intention to impose 100% tariffs on countries reducing their reliance on the US dollar for global trade, induced cautious sentiment in the Indian market. <br>Domestic export-oriented sectors such as IT, pharma, specialty <br>chemicals and textiles will remain in focus in anticipation of further trade policy decisions.</p>.<p>Last week, Nifty declined by 0.5% to reach 23,092 levels, dragged by earnings and Trump, and persistent FII selling with cumulative outflows reaching over Rs 70,000 crore for the month. Broader market indices faced heavy selling pressure as Nifty Midcap100 lost 2.5% and Nifty Smallcap100 plunged 4.1%. Realty index fell sharply by 9.3% on account growth concerns and uncertainty regarding the start of interest rate cut cycle by the Reserve Bank of India. Nifty IT was the only outlier, gaining 3.5% on the back of expected insulation from global trade risks.</p>.<p>The upcoming Union Budget will be crucial for the government as it would have to strike a balance between growth and fiscal discipline. The budget could emphasise on infrastructure-led growth, with enhanced spending on power, railways, and defence. Renewables and power transmission are likely to receive significant allocations.</p>.<p>Also, Sitharaman is expected to outline investments in high-speed trains, new routes, station upgrades, and environmental initiatives to reduce carbon emissions. We also expect the government to boost consumption by bringing few tax changes to support low-income individuals, employment schemes, or investment allowances.</p>.<p><em>(The author is Head of Research, Wealth Management, Motilal Oswal Financial Services Ltd)</em></p>
<p>This week, domestic equities are expected to trade within a broad range with some volatility amidst the ongoing earnings season, unfolding of Donald Trump’s economic policies and the Union Budget on Saturday, February 1. It will be an extended week as the markets will be open that day, to allow traders to make bets based on Finance Minister Nirmala Sitharaman’s announcements.</p>.<p>The Q3 earnings so far have been mixed, inducing short term action on the stock/sectoral front. Several heavy-weight companies from major sectors like banking, auto, pharma will be announcing their results this week and provide future business outlook which will be closely tracked by the investors. PSU and capex themed stocks such as railway, defence, capital goods will be in focus ahead of the Budget.</p>.<p>On the macro front, key data to be released this week includes the United States Federal Reserve and the European Central Bank’s interest rate decisions, US Q4 GDP and China’s manufacturing PMI for January.</p>.<p>In the US markets, the benchmark S&P 500 rose to a record high after President Donald Trump called for lower interest rates and cheaper oil prices. Markets also cheered Trump’s artificial intelligence infrastructure investment plan.</p>.Rupee weakest performing currency in Southeast Asia: Moody's.<p>Trump’s remarks targeting BRICS nations, reiterating his intention to impose 100% tariffs on countries reducing their reliance on the US dollar for global trade, induced cautious sentiment in the Indian market. <br>Domestic export-oriented sectors such as IT, pharma, specialty <br>chemicals and textiles will remain in focus in anticipation of further trade policy decisions.</p>.<p>Last week, Nifty declined by 0.5% to reach 23,092 levels, dragged by earnings and Trump, and persistent FII selling with cumulative outflows reaching over Rs 70,000 crore for the month. Broader market indices faced heavy selling pressure as Nifty Midcap100 lost 2.5% and Nifty Smallcap100 plunged 4.1%. Realty index fell sharply by 9.3% on account growth concerns and uncertainty regarding the start of interest rate cut cycle by the Reserve Bank of India. Nifty IT was the only outlier, gaining 3.5% on the back of expected insulation from global trade risks.</p>.<p>The upcoming Union Budget will be crucial for the government as it would have to strike a balance between growth and fiscal discipline. The budget could emphasise on infrastructure-led growth, with enhanced spending on power, railways, and defence. Renewables and power transmission are likely to receive significant allocations.</p>.<p>Also, Sitharaman is expected to outline investments in high-speed trains, new routes, station upgrades, and environmental initiatives to reduce carbon emissions. We also expect the government to boost consumption by bringing few tax changes to support low-income individuals, employment schemes, or investment allowances.</p>.<p><em>(The author is Head of Research, Wealth Management, Motilal Oswal Financial Services Ltd)</em></p>