- Selling pressure and profit booking ahead of the budget announcement.
- Rising inflation rates contributing to market uncertainty.
- Mixed sector performance with IT and FMCG leading, while metals lagged.
The Indian stock markets experienced significant selling pressure as investors opted to book profits ahead of the Union Budget 2024-25 announcement. This caution led to a marginal rise in the BSE Sensex and Nifty, with weekly gains of 0.11% and 0.12%, respectively.
Inflation has added to market uncertainty, with retail inflation rising to 5.08% and wholesale inflation to 3.4% in June. The mixed earnings season results and a global IT outage disrupting multiple industries further contributed to the market’s volatility.
Investor Caution Dominates Markets Pre-Budget Announcement
Global economic concerns, including fears of a renewed trade war between the US and China, have compounded the cautious sentiment in Indian markets. European markets also experienced declines, further impacting investor confidence. The disruptions caused by the global IT outage have affected various sectors, highlighting the market’s vulnerability to external shocks.
Despite the uncertainty, certain sectors have shown resilience. IT companies, buoyed by better-than-expected earnings, have attracted significant FII inflows. This trend indicates a potential upgrade in earnings expectations for FY25, particularly in defensive large-cap sectors like pharma and FMCG, which could provide a buffer against broader market volatility.
Technical analysis suggests that the Nifty’s near-term resistance level is at 24,854, while support lies in the 24,087-24,344 range. Market veterans advise a cautious approach, with a focus on maintaining a balanced portfolio. Bank Nifty‘s performance indicates a bearish sentiment, with a sell-on-rise strategy recommended unless the index breaks above 52,500.
As the budget day approaches, market participants are closely watching for announcements that could influence fiscal policies and industrial growth. Pro-industry measures, balanced with fiscal discipline, could provide the needed stability and foster a more optimistic market outlook in the coming weeks.
The Indian stock market remains in a state of cautious anticipation ahead of the Union Budget 2024-25. Investors are advised to stay vigilant, as budget outcomes and global economic developments will be key in determining the market’s direction.
“Nifty formed an engulfing bear pattern on daily charts giving up all the gains of the previous session. It gained 0.12 percent over the week but formed a bearish shooting star type pattern and closed near the week’s low.
