Dalal Street Outlook: 10 key market drivers for the week ahead

The stock market continued its upward momentum for the second consecutive week, with the Nifty 50 rising by 0.33 percent amid volatility. The positive sentiment was driven by easing global trade concerns, particularly after US President Donald Trump announced a temporary pause on tariffs for Mexico and Canada. However, market participants turned cautious ahead of the Reserve Bank of India’s (RBI) monetary policy meeting.

Despite a 25 basis point (bps) cut in the repo rate, the RBI maintained a neutral stance instead of the anticipated accommodative approach. The absence of additional liquidity measures, foreign institutional investor (FII) outflows, and rupee depreciation weighed on sentiment, while falling oil prices provided some support.

As the new week begins on February 10, markets are expected to trade within a range, with key focus areas including macroeconomic data, Q3 corporate earnings, US inflation, and Federal Reserve Chair Jerome Powell’s testimony.

Market Recap & Outlook

The Nifty 50 gained 78 points to close at 23,560, while the BSE Sensex advanced 354 points (0.46 percent) to settle at 77,860. Meanwhile, the Nifty Midcap and Smallcap 100 indices saw modest gains of 0.2 percent each.

According to Puneet Singhania, Director at Master Trust Group, "This week will be crucial for global and Indian markets as major economic indicators and corporate earnings shape investor sentiment. Key data points, including inflation figures and industrial output, will play a significant role."

Top 10 Factors to Watch This Week

1. Q3 Corporate Earnings Wrap-Up

The December quarter earnings season concludes this week, with over 2,000 companies, including Nifty 50 firms like Eicher Motors, Hindalco Industries, Apollo Hospitals, and Grasim Industries, set to release their financial results. Other notable companies reporting include:

Lupin

Siemens

Nykaa

Bata India

IRCTC

Ashok Leyland

Bharat Forge

Hindustan Aeronautics

Jubilant FoodWorks

Aditya Birla Fashion and Retail

Narayana Hrudayalaya

2. CPI Inflation Data (India)

The Consumer Price Index (CPI) inflation data for January will be released on February 12. Analysts expect inflation to decline further, reaching below 5 percent from 5.22 percent in December 2024. A falling trend has been observed since October 2024, when inflation crossed 6.21 percent.

Additionally, industrial and manufacturing production data for December will be released the same day, followed by Wholesale Price Index (WPI) inflation on February 14. Banking sector data, including loan and deposit growth figures, will also be published.

3. US Inflation & Economic Indicators

Globally, attention will be on US inflation, the Producer Price Index (PPI), and retail sales and industrial production data for January. Economists expect US inflation to hold steady at 2.9 percent, unchanged from December 2024.

4. Fed Chair Powell’s Testimony

Federal Reserve Chair Jerome Powell will testify before lawmakers for the first time since July 2024. On February 11, he will address the Senate Banking Committee, followed by an appearance before the House Financial Services Panel on February 12.

Since July, the Fed has cut interest rates by 100 bps across three meetings. However, in its January 2025 meeting, the central bank maintained rates at 4.25-4.5 percent, indicating a wait-and-watch approach to inflation.

5. Global Economic Data

Key international data releases include:

Europe & UK: Q4 2024 GDP estimates

China: January vehicle sales figures

6. Oil Prices & Energy Markets

Oil prices have turned favorable for India. Brent crude futures fell for the third consecutive week, closing at $74.66 per barrel, down 1.33 percent. The drop was driven by:

Increased US oil production under Trump’s policies

Higher US crude oil stocks

Potential US-China trade tensions affecting demand

Markets are also monitoring the first phase of US sanctions on Iran under the Trump 2.0 administration, which could impact global oil supply.

7. FII & DII Investment Trends

FII outflows continue, with net selling exceeding Rs 10,000 crore in February, following Rs 87,375 crore of outflows in January. However, domestic institutional investors (DIIs) countered the selling pressure, purchasing Rs 7,274 crore worth of equities in February so far.

8. IPO Market Activity

Dalal Street is set for an active week in the primary market, with nine IPOs launching, including three from the mainboard segment:

Ajax Engineering (Rs 1,269 crore) – Opens Feb 10

Hexaware Technologies (Rs 8,750 crore) – Opens Feb 12

Quality Power Electrical Equipments – Opens Feb 14

The SME segment will see IPOs from Chandan Healthcare, PS Raj Steels, and others, while some existing issues will close early in the week.

9. Technical Analysis & Market Trends

Nifty is expected to consolidate below the 23,800 level, with key support at 23,400 and 23,250. A decisive break below 23,250 may disrupt the ongoing bullish trend. Resistance is seen at 24,000-24,200 levels.

Options data suggest a trading range of 23,000-24,000. Key strike levels:

Call OI: 24,000 (highest), followed by 24,500 and 23,800

Put OI: 22,600 (highest), followed by 23,000 and 23,200

India VIX, the volatility index, declined 2.91 percent to 13.69, reflecting market stability and bullish sentiment.

10. Currency Market & Bond Yields

The Indian Rupee weakened 1.25 percent to 87.59 against the US Dollar, marking its lowest close in years. The US Dollar Index closed at 108.096, down 0.37 percent, while the US 10-year Treasury yield fell to 4.493 percent, continuing its four-week downtrend.

Final Thoughts

With a mix of earnings reports, inflation data, and global economic events, markets are likely to remain rangebound but volatile. Investors should focus on stock-specific movements, sectoral trends, and macroeconomic indicators for informed decision-making.