The Indian stock market opened the week positively after a shortened trading week. The benchmark Sensex and Nifty both rose by 0.6%, reaching 71,107.46 (up 407 points) and 21,475.90 (up 123 points) at the start of trading.
Domestic investors are preparing for a hectic week as they eagerly await Finance Minister Nirmala Sitharaman's budget proposals and other macro-economic guidance, scheduled to be announced on Thursday.
In addition, investors will also be paying attention to the results of the first policy meeting of 2024 for the US Federal Reserve, which is set to take place on Wednesday.
"Two important events are due this week: the interim Budget and the Fed meeting on rate decision. But these events are unlikely to impact the market in a big way. The Budget will be a vote on account without major announcements capable of impacting the market. Regarding the Fed decision, no rate cut is expected, but the commentary will be keenly watched," said VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services.
On Tuesday, there was a significant downturn in the stock markets as the Sensex dropped by more than 1,000 points. This was attributed to several factors such as overvaluation, recent withdrawal of funds from India by foreign portfolio investors, and some minor profit-taking activities.
Foreign portfolio investors have shifted gears by selling off Indian stocks, becoming net sellers in the Indian equity market in January 2024. This comes after a rush to acquire domestic stocks in the preceding two months, namely November and December.
The information from the National Securities Depository Limited (NSDL) revealed that in January, Foreign Portfolio Investors (FPIs) offloaded Indian stocks amounting to Rs 24,734 crore. In contrast, in December, they were keen on investing in Indian stock markets, with a total inflow of Rs 66,135 crore.
"FPIs were sellers in autos and auto ancillary, media and entertainment and marginally in IT. They bought in oil and gas, power and selectively in financial services. The rising bond yields in the US is a matter of concern and this has triggered the recent bout of selling in the cash market," said Vijayakumar.
