US Fed policy, Union Budget & Q3 earnings to shape market sentiment

Stock markets are set for an eventful week as key events, including the US Federal Reserve's interest rate decision, India’s Union Budget, and the ongoing Q3 earnings season, are expected to shape investor sentiment. Analysts believe that these factors, alongside global market dynamics, foreign investor activity, rupee-dollar fluctuations, and crude oil price movements, will significantly impact trading.
The Union Budget, scheduled for February 1, has drawn intense focus as investors await policy measures that could boost economic growth and alter market sentiment. Market participants are hoping for a meaningful trigger to drive positivity amidst a lackluster Q3 earnings season, particularly in the consumption and financial sectors. Analysts have noted subdued performance in these areas, adding to the cautious sentiment in the markets.
On the global front, the Federal Open Market Committee (FOMC) policy meeting this week is expected to play a pivotal role in influencing global equities. Santosh Meena, Head of Research at Swastika Investmart Ltd, highlighted the importance of monitoring US bond yields and the Dollar Index, noting that signs of reversals in these metrics could foster optimism in global markets. He further emphasized the critical role of Foreign Institutional Investor (FII) flows in shaping the Indian equity market.
Domestic exchanges, BSE and NSE, have announced that trading will remain open on February 1 to accommodate the Union Budget presentation, according to information. Ajit Mishra, Senior Vice President (Research) at Religare Broking Ltd, remarked that this week holds immense significance not only for equity markets but also for the broader economy. Additionally, key earnings reports from companies such as Tata Steel, Bajaj Auto, Maruti, Tata Motors, ONGC, and IndusInd Bank are expected to influence market movements during the week.
Last week, the benchmark indices reportedly, ended on a weak note, with the Sensex shedding 428.87 points, or 0.55%, and the Nifty losing 111 points, or 0.47%. Analysts predict that domestic equities are likely to trade within a broad range, with heightened volatility driven by global developments and earnings reports. Siddhartha Khemka, Head of Research at Motilal Oswal Financial Services, expects PSU and capex-themed stocks, including those in railways, defense, and capital goods, to remain in focus ahead of the Budget.
Prashanth Tapse, Senior Vice President (Research) at Mehta Equities Ltd, reportedly stated that investor caution is likely to persist ahead of the Union Budget announcement, as markets await clarity on fiscal policies. With high-stakes events scheduled this week, market participants are expected to remain vigilant, balancing domestic triggers and global cues to navigate the uncertain landscape.

(Business Correspondent)