Amidst heightened volatility triggered by renewed selling in IT and Bank stocks, rising crude oil prices, weak rupee against dollar and subdued expectations over the Union Budget; the domestic stock markets weakened during the week ended. Optimism about the US economy, driven by rate cuts, AI-led US stocks, and Trump’s win, have fuelled buzz around American Exceptionalism and capital shifts from emerging markets to the US. Any reversal of the FII flows will happen only after the market signals peaking of the dollar and US bond yields followed by their decline. The dollar index, which is currently hovering around 109 against a basket of six top currencies, has appreciated by nearly six per cent over the past three months. In the coming fortnight, a good Union Budget can be a game-changer if it delivers bold reforms addressing structural challenges, spurring growth, and encouraging investments. A well-balanced Budget aligned with India’s growth vision could significantly boost market sentiment and long-term growth prospects. In the coming MPC meeting of the RBI, the likelihood of an Repo rate cut depends on inflation trends, domestic growth indicators, and global monetary policy. If inflation remains within the central bank’s comfort zone and growth requires further support, a rate cut could be considered. During the week ahead, Donald Trump will take over as the 47th President of the United States, and global markets could remain volatile throughout the week. Many leading companies like HDFC Bank, One 97 Communications (Paytm), Zomato, IDBI Bank, Indian Overseas Bank (IOB), Tata Technologies, Bharat Petroleum Corporation, Hindustan Unilever (HUL), Housing & Urban Development Corporation (HUDCO), Adani Green Energy, Dr Reddy’s Laboratories, DLF, and Indigo will announce their quarterly earnings this week. Expect sharp stock-specific moves during the course of the week.

F&O/ SECTOR WATCH

On the back of heightened volatility in the derivatives segment, both the Nifty and the Bank Nifty marked a seven-month low (23,047 for Nifty and 47,898 for Bank Nifty) during the early part of the week. Mild recovery helped the indices recoup some losses helping Nifty and Bank Nifty to close at 23,203 and 48,541.

(The author is a senior maket analyst and former vice- chairman, Andhra Pradesh State Planning Board)