Week Ahead

The Nifty 50 jumped 390 points to 23,482 and the BSE Sensex rallied 1,316 points to 77,506, while the broader markets underperformed the benchmark indices with the Nifty Midcap 100 and Smallcap 100 indices rising 0.4 percent and 0.14 percent, respectively. Among sectors, banking & financial services, auto, real estate, and FMCG stocks recorded northward journey, however, the selling was seen in technology, metal and pharma stocks.

In the coming first week of February, the market is expected to be rangebound and look for cues from the RBI monetary policy, Bank of England meeting, US jobs data, manufacturing & services PMI, and update if any on policies from US Donald Trump administration. Further, the stock-specific action will also be seen given the ongoing corporate earnings season.

After the budget, now the market participants will shift their focus on the first monetary policy meeting of the current year by the Reserve Bank of India Monetary Policy Committee (RBI - MPC) scheduled to be held during February 5-7. Most economists expect the central bank to cut repo rate by 25 bps to 6.25 percent from 6.5 percent currently, while focussing on the new governor Sanjay Malhotra's commentary and further liquidity measures if any.

Further, the focus will also be on the corporate earnings season which will remain in full swing as more than 750 companies will declare their December 2024 quarter results in the coming week including the Nifty 50 names like Power Grid Corporation of India, Asian Paints, Titan Company, Bharti Airtel, Britannia Industries, Hero MotoCorp, ITC, State Bank of India, and Mahindra & Mahindra.

Technically, the Nifty looks much better now, forming long bullish candle on the weekly charts, engulfing previous two weeks' charts. The index with close at 23,482 climbed above the previous two weeks' upper range of 23,400 and closed tad above 50-week EMA, making the trend positive, but it still remained below short-term moving averages (10, 20-week EMAs) and the momentum indicators RSI (Relative Strength Index) still traded in the lower band and MACD (Moving Average Convergence Divergence) still below zero line. Hence, the consolidation and rangebound trading may sustain until the index decisively closes above 24,000 mark, with immediate resistance at 23,655 (10-week EMA), while the support lies at 23,300, followed by 23,100.

The weekly derivative data suggested that the broad trading range for the Nifty 50 may be 23,000-24,000 in the short term with immediate hurdle at 23,500 and support at 23,300-23,200 area.