Business & Investment

Budget 2021, RBI policy among the key factors that could drive the market this week

Mumbai: This week is arguably one of the most turbulent weeks in the domestic market, and therefore it could be the most volatile week in recent months as investors react to the union. budget, Reserve Bank of India Monetary Policy and December Quarter Earnings.

The Benchmark Index received the long-awaited revision last week as the Nifty 50 and Sensex fell by more than 5% each, driven by sales from foreign investors ahead of the budget.

Globally, the stock market is showing signs of fatigue after a surge earlier this month as investors point out delays in deploying the COVID-19 vaccine in Western countries. There are also concerns about the bubbling reputation among the ongoing GameStop stories in the US market.

That said, some of the factors that determine the fate of the market this week are:

Budget-Will it happen?
The coalition budget and its announcements will continue to be the main focus of the market, as investors expect the government to provide business cycle stimulus to further strengthen the ongoing economic recovery. Still, concerns continue amid new tax possibilities for the ultra-rich to support government funding and dissatisfaction with access to corporate profits.

RBI Policy – ​​Liquidity Perspectives Are Important
By the time the market digests the impact of the coalition budget, the RBI’s Monetary Policy Committee will announce its last bimonthly policy for this fiscal year on Friday. Although less expected on the interest rate side, the market will be more concerned about what the central bank is trying to say about the outlook for bond purchases to support domestic liquidity and government bond yields.

Q3 earnings go home stretch
Revenues for the December quarter will be headquartered with eight more Nifty50 companies reporting their numbers, including Housing Development Finance Corp, Mahindra & Mahindra, Bharti Airtel, Divi’s Laboratories, Hero MotoCorp and State Bank of India.

Pay attention to FII
The intensity of net sales by foreign investors last week surprised many. With concerns about vaccine rollouts, profits from foreign portfolio investors seeking to temporarily reduce their exposure to emerging markets could accelerate further with substandard budgets.

January car sales data
Automakers report sales volume data from Monday to January. Investors are keenly analyzing the data for signs of further recovery in sector demand. Better than expected numbers could help alleviate concerns about margins caused by Maruti Suzuki India’s third-quarter earnings.

Technical outlook
The Nifty50 index was clearly below Friday’s 50-day MA for the first time since September, reflecting the degree of market weakness. “The market is a little longer than usual and off average, so we could see a significant decline and / or time adjustment in the short term,” said Nirari Shah of Samco Securities.

Macro data point
Investors respond to a number of data points during the week, centered on January manufacturing PMI, service PMI, and GST collected data. Each data point may provide insights into the health of the economic recovery.

Budget 2021, RBI policy among the key factors that could drive the market this week Budget 2021, RBI policy among the key factors that could drive the market this week

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