Monday, February, 10,2025

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Rupee Weakens, FIIs Sell Off: Markets brace for volatility ahead of Budget

The depreciation of the Indian rupee against the dollar, persistent selling by foreign institutional investors (FIIs), and mixed trends in global markets resulted in another challenging week for the Indian stock market. Despite strong quarterly results from companies like Infosys and TCS, both major indices recorded declines.

This week is pivotal for the markets, with the inauguration of the Trump administration on January 20 and the announcement of new U.S. policies. These developments could provide a sense of direction for global markets. Furthermore, the upcoming Union Budget, set to be presented at the end of next week, holds significant anticipation. Market recovery could hinge on investorfriendly announcements in the budget.

FIIs continued their selling spree, raising concerns among technical analysts about the likelihood of a market recovery. Historically, market corrections every four years are viewed as cyclical. However, as the market sentiment worsens, the author suggests that investors should start selective, phased investments in fundamentally strong stocks, which are likely to rebound during future recoveries.

The BSE Sensex fell by 759.58 points (-0.98%) to close at 76,619.33, while the NSE Nifty declined by 228.30 points (-0.97%) to end at 23,203.20. Interestingly, the mid-cap and small-cap indices remained unaffected by the broader decline, ending the week with marginal gains, a positive sign for the market’s future.

FIIs sold equities worth Rs 25,218.50 crores last week, while domestic institutional investors (DIIs) bought shares worth Rs 25,151.27 crores, preventing a sharper decline in the indices. For the month, FIIs have sold equities worth Rs 46,576.06 crores, whereas DIIs have purchased shares worth Rs 49,367.14 crores.

The international market volatility affected Indian bullion prices. Jaipur’s bullion market saw a Rs 1,100 per 10 grams rise in the price of 24-carat gold, from Rs 80,200 to Rs 81,300. In contrast, silver prices declined by Rs 100 per kilogram, falling to Rs 93,000 from Rs 93,100. With the stock market under pressure, gold and silver prices are expected to see further improvements, contingent on global trends and local demand.

Traders anticipate continued weakness in the stock market, influenced by FII trends and the policy directions of the Trump administration. Many suggest that investors await the Union Budget announcements before making significant moves. However, risk-tolerant investors may consider limited investments in companies with consistent dividend payouts.

This week, two companies on the main board and six companies via the SME platform are offering IPOs, presenting opportunities for IPO-focused investors. Additionally, two companies filed their draft red herring prospectuses (DRHP) with SEBI this week.

(THESE ARE THE AUTHOR’S PERSONAL VIEWS)

Vimal Kothari, Associate Editor, First India News & Senior Journalist

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