Nifty set for weak open as Sitharaman unveils budget

GIFT Nifty:

The Nifty 50 is projected to open on a weak note, following a 97-point decline in the GIFT Nifty January 2025 futures contract.

Today, Finance Minister Nirmala Sitharaman will present her eighth consecutive Union Budget, which is anticipated to contain measures to bolster weakening economic growth and ease the burden on the middle class, who are facing high prices and stagnant wages. The government will also need to maintain fiscal responsibility.

Institutional Flows:

Foreign portfolio investors (FPIs) sold shares worth Rs 1,188.99 crore, while domestic institutional investors (DIIs) were net buyers to the tune of Rs 2,232.22 crore in the Indian equity market on 31 January 2025, provisional data showed.

According to NSDL data, FPIs have sold shares worth Rs 81903.72 crore in the secondary market during January 2025.

Global Markets:

The US Dow Jones index futures were currently down by 371 points, signaling a weak opening for US stocks on the next trading day.

The Trump administration announced new tariffs on imports from Mexico, Canada, and China, starting Saturday. These tariffs are partly in response to illegal fentanyl distribution. Potential tariffs include 25% on Mexican and Canadian imports, 10% on Chinese goods, and future tariffs on chips, oil, gas (possibly by February 18th), steel, aluminum, and copper. Trump insists these tariffs are unavoidable and will generate substantial revenue, even hinting at possible European tariffs. He contrasted the USs historical reliance on tariffs with its current dependence on income tax.

The news caused US stock market declines. At the close in NYSE, the Dow Jones Industrial Average fell 0.75%, while the S&P 500 index declined 0.5%, and the NASDAQ Composite index declined 0.28%.

Apple shares closed lower as the broader market selloff erased earlier gains. The company expects sales growth in the low- to mid-single digits for its fiscal second quarter, easing concerns about flagship handset sales, which slightly missed estimates in the holiday season. CEO Tim Cook remains optimistic, citing Apple Intelligence (AI features) as a driver of future sales.

Exxon Mobil stock fell 2.5%, despite exceeding fourth-quarter profit expectations. Higher oil and gas production helped offset lower crude prices and weaker refining margins.

Meanwhile, economic data painted a mixed picture. The PCE price index, the Federal Reserves preferred inflation gauge, climbed 0.3% in December, up from 0.1% in November, bringing the annual rate to 2.6% from the prior months 2.4%. The core PCE reading, which strips out volatile food and energy prices, showed a 0.2% month-over-month increase and 2.8% annual gain, keeping inflation stubbornly above the Feds 2% target.

Personal spending also surged 0.7% month-over-month, outpacing forecasts of 0.5%, as strong job growth and rising wages continued to support consumer demand. The Fed will be closely monitoring these figures to guide its next monetary policy move.

Domestic Market:

The benchmark indices closed with substantial gains on Friday, rising for the fourth consecutive session, supported by a strong set of earnings from market heavyweights. Anticipation of favorable moves in the upcoming Union Budget also bolstered market sentiment. The Nifty closed above the 23,500 level. All the sectoral indices on the NSE ended in the green, with consumer durables, FMCG and realty shares gaining the most.

The barometer index, the S&P BSE Sensex, rallied 740.76 points or 0.97% to 77,500.57. The Nifty 50 index added 258.90 points or 1.11% to 23,508.40. In the past four consecutive sessions, the Sensex and Nifty rallied by 2.83% and 2.98% respectively.

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