Economic Slowdown in India? HSBC Economist Pranjul Bhandari Analyzes

Top Loser:

1. HCL Technologies Ltd: Declined by 4.51%, closing at ₹1,711.95.

2. Tech Mahindra Ltd: Declined by 4.01%, closing at ₹1,653.90.

3. Wipro Ltd: Declined by 3.80%, closing at ₹307.95.

4. Hindalco Industries Ltd: Declined by 3.30%, closing at ₹586.90.

5. Shriram Finance Ltd: Declined by 3.00%, closing at ₹511.65.

Top Gainer:

1. ICICI Bank Ltd: Gained by 1.55%, closing at ₹1,227.95.

2. Britannia Industries Ltd: Gained by 1.46%, closing at ₹5,176.25.

3. Mahindra & Mahindra Ltd: Gained by 1.08%, closing at ₹2,831.60.

4. Hindustan Unilever Ltd: Gained by 1.05%, closing at ₹2,392.85.

5. State Bank of India: Gained by 0.68%, closing at ₹749.20.

The Finance Ministry has invited applications for the position of the next SEBI Chairperson, as Ajay Tyagi's term nears its end.

Candidates need expertise in capital markets, economics, or finance, along with 25 years of experience in related fields. The selected candidate will lead SEBI, India's capital markets regulator, for a 5-year term. Interested applicants can submit their applications by February 28. SEBI plays a critical role in overseeing stock markets, protecting investors, and ensuring market stability, making this a key appointment for India's financial sector.

Monday, January 27, is pivotal for the stock market as 80 companies are set to announce their Q3 earnings. Major names include Tata Steel, Coal India, Indian Oil, Adani Total Gas, Canara Bank, and ACC. Bajaj Housing Finance, Union Bank of India, and Railtel Corporation will also release results. ICICI Bank already reported a 15% rise in PAT to ₹11,792 crore for Q3 FY25. Other companies announcing results today include Emami, Adani Wilmar, Petronet LNG, Sundram Fasteners, and Prataap Snacks, spanning industries like logistics, chemicals, and manufacturing.

This week brings high market activity with key events including the US Fed meeting, F&O expiry, and Union Budget 2025 on Saturday. The Sensex, currently at 76,190, may face resistance at 77,000, with potential to reach 78,150 or fall to 75,200. Last week, the Sensex fell 429 points, while Nifty dropped 0.5% to 23,092, its lowest since June 2024. Wipro led gains with a 14% rise, while Trent declined 12%. India VIX at 16.75 signals higher volatility, possibly reaching levels of 24-25.

Chinese AI startup DeepSeek has caused turmoil for US tech giants like Nvidia, OpenAI, and Google. Using cost-efficient AI models with reduced-capability chips, DeepSeek has disrupted the AI space, shaking investor confidence in US dominance. Nasdaq 100 futures fell nearly 1.9%, and Japan's Advantest Corp shares plunged 8.6%. Conversely, Chinese tech stocks soared, with Hong Kong’s Hang Seng Tech Index rising 2%. DeepSeek’s breakthrough highlights a shift in global AI leadership, boosting China’s market optimism while triggering a selloff in US and Japan markets.

Foreign portfolio investors (FPIs) pulled ₹64,000 crore from Indian markets in January 2025, driven by the rupee's decline and higher US bond yields. The Indian rupee weakened due to rising oil prices and global uncertainties, pushing investors toward US assets offering better returns. The surge in US Treasury yields, hitting multi-year highs, attracted funds away from emerging markets like India. This marks one of the largest monthly outflows, raising concerns about market stability and growth. Sectors like IT and financials faced significant pressure from the withdrawals.

India reportedly brought home investments commitments totalling over ₹ 20 lakh crore from the five-day World Economic Forum Annual Meeting.

The biggest beneficiary of the forum was the Maharashtra delegation led by chief minister Devendra Fadnavis , which attracted 80 per cent of the total investments. Uttar Pradesh presented their vision to become a $ 1 trillion economy and secured major investments as well. A joint press conference was also held for the first time , comprising of state and Union ministers from various political parties.

Finance Ministry is weighing the option of tweaks in income tax rates at lower income levels. Proposal was considered in the July Budget but failed to pass muster. Support for the MSME sector is being seen as crucial , given its outsized influence in large-scale employment.

The government may also reiterate its intent to rationalise the Goods and Services Tax ( GST ) structure. This is a modal window. Easier access to credit , extension of incentives and subsidies to MSMEs , have featured in the run-up to the Budget. People in the know say a rationalisation of import duties , especially on intermediate products , is also under discussion.

The upcoming week on Dalal Street is packed with significant developments. Investors are eyeing the Union Budget 2025, Q3 earnings from major firms, and the FOMC meeting outcome. Key data points include the US GDP, manufacturing PMI, and auto sales figures. Global cues, including the Federal Reserve's rate decision, will heavily influence market trends. Domestic indices will also respond to earnings from ITC, Adani Enterprises, and Tata Steel. With FIIs' activities and crude oil prices adding to market dynamics, traders expect a volatile session, making this a crucial week for investors.

Foreign Institutional Investors (FIIs) have sold Indian stocks worth ₹66,600 crore in January 2025. This large-scale selling is due to a stronger U.S. dollar and higher U.S. bond yields. The financial sector has been hit the hardest, while the IT sector has shown some resilience. Analysts believe that as long as the dollar index stays above 108 and the 10-year U.S. bond yield remains above 4.5%, FIIs are likely to continue selling. Domestic investors are now crucial in supporting the Indian stock market during this challenging period.

Gold prices in India climbed to a record ₹83,100 per 10 grams on Friday, reflecting an increase of ₹200, as per the All India Sarafa Association. This is the eighth consecutive day of gains for gold. Globally, prices are nearing a three-month high at $2,780 per ounce due to rising demand and growing economic concerns. Analysts point to uncertainties in U.S. trade policies and investor interest in safe-haven assets as key drivers. Upcoming central bank decisions could further impact gold rates

Next week, several stocks, including Wipro, BPCL, Tanla Platforms, and REC, will trade ex-dividend. Wipro has announced a dividend of ₹1 per share, REC offers ₹3.25, and BPCL declared a significant ₹12 per share. These stocks will trade ex-dividend between January 29 and February 2, making them key for dividend-focused investors. Ex-dividend trading indicates the stock is trading without the rights to the declared dividend. Dividends provide investors with regular income and reflect a company’s financial health. Stay updated for critical dates and payouts on these stocks.

Prominent business leaders received prestigious Padma Awards this year for their significant contributions. Kumar Mangalam Birla, Chairman of Aditya Birla Group, was conferred the Padma Bhushan, recognizing his role in driving industrial growth and innovation. Padma Shri was awarded to Sudha Murty, renowned author and Infosys Foundation Chairperson, for her social work and philanthropic efforts. Additionally, Rakesh Jhunjhunwala (posthumously), celebrated investor and stock market icon, was recognized with the Padma Shri for his impact on India's financial markets. These awards highlight their remarkable influence on India's progress.

NTPC is set to report its earnings for the third quarter of FY25 on January 25. Net profit is likely to grow 9 percent from a year earlier to Rs 5016 crore. Growth in power demand and generation will continue to boost earnings , say analysts. This is the first earnings report from the power major after its green energy subsidiary NTPC Green was listed separately on both the BSE and the National Stock Exchange. The most optimistic of the estimates , by Mirae Asset Sharekhan , sees revenue increase by an annualised 14 percent to Rs 45,100 crore.