Decoding Market Outlook & Overview: Union Budget, FOMC Key Triggers Next Week

By Malvika Gurung

Investing.com -- The domestic market witnessed a bloodbath on Friday’s session with sell-offs across Adani Group stocks intensifying for the second consecutive day following Hindenburg’s report, along with bank stocks crashing, especially the public sector banks.

Benchmark indices witnessed their steepest single-day fall in four months, with Nifty50 ending 1.61% lower at 17,604.35 points and Sensex slashing 874.16 points or 1.45% on Friday.

In a note provided to Investing.com, Dr VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said that the market sentiment in the week got dampened by the unfavourable research report on Asia’s richest promoter Group companies despite optimistic results announced by the blue chips.

He noted that this has in turn obnoxiously affected banking stocks, with BSE Bank down over 5% and PSU banks being the most impacted due to high exposure.

The market appeared to be uneasy ahead of the upcoming Union Budget and Fed meeting, and FII were selling as funds continued shifting to other emerging markets because of attractive valuations, the market expert said.

On the upcoming week’s outlook, Vijayakumar states that the market will take cues from the outcomes of the Union Budget and FOMC scheduled in the week.

“Any increase in funding towards capital expenditure and rural areas within the constraints of the fiscal deficit controls will be favourable, while any unfavourable proposals, such as an increase in LTCG rates/ duration or populist measures due to the pre-election budget, could add to the bearish mood in the short-term,” he added.

Recent surveys show that the FOMC could raise interest rates by 50 bps at the upcoming meeting, and any decrease from this level will be considered positive.

Further, the recent trend of an uptick in crude prices due to a rebound in demand from China may add pressure to the domestic market in the near term, Vijayakumar said.