Market Outlook: From Budget 2019 to macro-data, what all to set the course of equity indices

Expected sops from the interim budget 2019-20 and fears of over slippage in fiscal deficit will determine the trajectory of the Indian equity market in the coming week.

Market observers pointed out that select industrial production data coupled with stock-specific movement due to the ongoing earnings result season and F&O expiry dynamics will affect investor's sentiments.

"The upcoming interim budget and RBI's monetary policy are likely to direct the trend of the market going forward," SMC Investments & Advisors CMD D.K. Aggarwal told IANS.

"Nifty is likely to trade between 10,750-11,100 levels while Bank Nifty is expected to trade between 26,900-27,700 levels."

Parliament's Budget session will kick off from January 31, followed by the interim budget 2019-20 on February 1.

"Traders should anticipate further declines in frontline indices if Nifty breaches 10,700 and the next stop could be 10,500 or lower. Expiry cues and Budget expectation will guide trade this week," said Sahil Kapoor, Chief Market Strategist, Research, Edelweiss Wealth Management.

According to Geojit Financial Services' Head of Research Vinod Nair, "Market is likely to extend a range bound movement as the upcoming interim budget and the RBI's monetary policy are the two major events that could steer market sentiment.

"We do not expect important measures to be announced in the interim budget specifically benefiting stocks and sectors, other than consumption-oriented sectors given the populist agenda. But this ongoing populist risk will reduce post the budget and election."

Watch Zee Business Tweet Video here:

कौन सी हैं वो कंपनियां जिनमें प्रोमोटर की बड़ी हिस्सेदारी गिरवी है और मुनाफे से ज्यादा ब्याज का बोझ भी है... जानिए सुमित मेहरोत्रा से।@SumitResearch @AnilSinghviZEE @deepaliranaa pic.twitter.com/zspPUimFUv

— Zee Business (@ZeeBusiness) January 29, 2019

Apart from the Budget, the week ahead will be heavily influenced by Q3 corporate earnings and the direction of foreign fund flows.

Companies like Escorts, Piramal Enterprises, Wockhardt, Axis Bank, Bank of Baroda, Housing Development Finance Corp, Bajaj Auto, ICICI Bank, Indian Oil Corp, NTPC, Bharti Airtel, Hero MotoCorp and Dr Reddys Labs are expected to announce their quarterly results in the coming week.

Besides quarterly results, macro-economic data points like Index of Eight Core Industries (ECI) figures and the country's fiscal deficit data up to December will be keenly watched by investors.

In addition, monthly automobile sales figures and the Purchasing Managers' Index (PMI) manufacturing data will become other major sentiment drivers.

On the currency front, the rupee is expected to appreciate due to global factors.

"Rupee can appreciate to 70.50 next week on back of soft US Fed tone, after a long depreciation streak which started at 69.24," said Edelweiss Securities' Head of Forex and Rates Sajal Gupta.

On a weekly basis, the Indian currency stood standstill at 71.18 against the US dollar at close on Friday compared to last week, after a largely negative trend for most part of last week.

The week ended on January 25 also witnessed an outflow of foreign funds as FIIs were net sellers to the tune of over Rs 559.31 crore, provisional data on the BSE showed.

Last week, disappointing quarterly results and negative global cues pulled the Indian equity market down.

Consequently, the 30-scrip Sensitive Index (Sensex) of the Bombay Stock Exchange closed at 36,025.54 points -- down 361.07 points or 1 per cent from its previous week's close.

Similarly, the NSE Nifty closed lower by 126.4 points or 1.16 per cent to 10,780.55 points.