The Indian stock market displayed cautious sentiment as trading began on Thursday, January 30, 2025, influenced by recent actions from the US Federal Reserve and the rapidly approaching Union Budget 2025, which will be presented on February 1. Following the US Federal Open Market Committee's (FOMC) unanimous decision to pause its interest rate cut campaign, the benchmark indices reflected mixed signals. The S&P BSE Sensex initially dipped 43.69 points to 76,489.27, whereas the Nifty 50 saw a marginal decrease of 5.30 points, opening at 23,157.80.
This static performance is particularly telling with regard to investor anxiety surrounding the budget announcement. Historically, market movements can become erratic leading up to major financial disclosures, and this year appears no different, with volatility affecting trading decisions.
At the opening bell, the BSE Sensex edged up by 49 points, or 0.065%, standing at 76,582.44, and the NSE Nifty 50 climbed 43 points, or 0.18%, reaching 23,197.20. This slight upward movement came amid concerns over external economic signals and internal budget anticipations. Market breadth remained positive, with 1,539 stocks advancing, 701 declining, and 128 remaining unchanged on the BSE.
On the global front, the Federal Reserve's decision to maintain rates at 4.25-4.5% was anticipated among analysts, reflecting its data-dependent stance. “The Fed decision to pause yesterday was on expected lines,” remarked Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, underlining how the central bank has emphasized the need for substantial progress on inflation before making drastic changes to monetary policy.
Notably, this policy move has engendered little emotional market reaction, according to Ankita Pathak, Chief Macro and Global Strategist at Ionic Wealth by Angle One. “This policy decision was largely non-eventful,” she shared, pointing to the consistent trimming of Treasury securities and agency-backed debts as part of the Fed's purse strings tightening protocol.
The mixed performance of the Indian stock market mirrored broader dynamics. Most sectors exhibited varied results; nine out of twelve sectoral indices on the National Stock Exchange (NSE) advanced, led by the Nifty Realty sector, which capitalized on recent positive trends. The Nifty Auto sector, on the other hand, dragged due to notable declines from companies, including Tata Motors and Infosys.
Pre-budget speculations were also drawing attention to specific stock movements, especially within the fertilizer and railway sectors. Market participants pondered whether the activity was merely a spike or indicative of fledgling rallies. Analysts have indicated these sectors might see increased volatility as budget discussions loom—highlighting the fine line investors walk between speculation and investment prudence.
Adding to the market uncertainty, foreign institutional investors (FIIs) continued their selling trend for the nineteenth consecutive session, offloading equities worth Rs 2,586 crore, which raised eyebrows among market veterans, highlighting concerns about foreign investment confidence. Conversely, domestic institutional investors (DIIs) emerged as net buyers during the same time frame, investing Rs 1,792.71 crore, slightly stabilizing the tremors felt from the FII sell-offs.
Dhawal Ghanshyam Dhanani, Fund Manager at SAMCO Mutual Fund, pointed out the stalled “Fed Pivot,” noting, “This gives the impression the FOMC wants more time to assess the effects of the current US administration's policies, including tariffs, tax cuts, and deregulation.” His analysis reflects the broader investor sentiment burdened by economic data and its projected impacts on markets.
During the trading session, investors remained wary of the heightened volatility indicated by the India VIX, staying mindful of potential fluctuations as the monthly expiry day for futures and options approached along with the budget. Ajay Bagga, another market expert, commented on split investor behavior as they positioned for potential volatility, emphasizing the need for caution.