Will RBI’s liquidity measures boost market confidence? Banking stocks in focus

Indian benchmark indices, Sensex and Nifty, are expected to open higher on Tuesday, after ending lower in four straight sessions, tracking weak cues from global peers. The positive trends on Gift Nifty also indicate a gap-up start for the domestic bourses, with the Nifty futures trading at 22,941 level, up 20.5 points, or 0.09%, at the time of reporting. Overall, the market sentiment remains on edge ahead of Wednesday's Federal Reserve rate decision and policy guidance, while the impending Union Budget and Economy Survey data will keep investors on toes.

Stocks in banking space will be in focus today after the Reserve Bank of India (RBI) last evening announced a slew of measures to inject liquidity into the system, including bond purchases and dollar/rupee swaps. The central bank has proposed to buy government securities worth ₹60,000 crore in three different tranches, while it plans to conduct a USD/INR buy/sell swap auction of $5 billion for a tenor of six months on January 31. These measures are expected to collectively infuse ₹1.5 lakh crore into the banking system to ease rising liquidity crunch.    

Tech stocks, DeepSeek rattle Wall Street

In the overnight trade, Wall Street closed in red, weighed down by tech stocks, as sentiment was dented by growing competition in the artificial-intelligence (AI) market. Tech heavyweights Nvidia crashed up to 17%, dragging the Nasdaq composite down by 3.07% after Chinese startup DeepSeek's launched a free, open-source artificial intelligence model to rival OpenAI's ChatGPT. There is fear in the market that DeepSeek' low-cost AI model may impact lofty valuations of chipmakers to data centers. At the close bell, the Dow Jones Industrial Average was up 0.65%, and the S&P 500 fell 1.46%.

AI fears spook Asian markets

Markets in Asia-Pacific region witnessed mixed trend on Tuesday, tracking weak cues from Wall Street, as growing concerns about the valuation of artificial-intelligence companies left investors jittery. Japan’s Nikkei 225 slipped nearly 0.6%, led by losses in chip-related shares including Advantest Corp., SoftBank Group and Furukawa Electric Co. Hong Kong’s Hang Seng was up 0.1%, while Australia’s ASX 200 ended tad higher by 0.05%. Many others Asian markets such as China, Indonesia, South Korea, Taiwan and Vietnam were closed for Lunar New Year holidays.

Domestic markets extend fall for 4th day

The beginning of the special stretched trading week was quite sloppy as the market remained grappled with widespread selling pressure amid mixed corporate earnings, sustained foreign fund outflows, and policies uncertainty by U.S. President Donald Trump. Throughout this week, series of events, including U.S. Fed policy, Economic Survey, and Union Budget, are set to unfold, with each holding the potential to shift market dynamics significantly.

Extending fall for the fourth consecutive session, the equity market ended lower on Monday amid broad-based selling, with all sectoral indices closing in negative terrain. The Sensex lost 824 points to settle at 75,366, and the Nifty declined 263 points to close at a seventh month low of 22,829. The broader market saw massive selling, with BSE midcap and smallcap indices falling 2.7% and 3.5%, respectively.

Technical outlook

Nifty started the special elongated trading week on a weak note, with the benchmark index sliding by 1% to settle in the 22,800 zone. This sharp fall raised alarms, indicating a potential breakdown in the consolidation pattern that had been apparent on the daily chart of the Nifty50 index, says Osho Krishnan, Sr. Analyst, Technical & Derivatives of - Angel One.

“Now, since we are about to enter a crucial and major support zone of 22,800 – 22,400, we would change our stance from bearish to cautious now.  From hereon, it would be very difficult to anticipate what the Union Budget has to offer and other global developments, but unless there is any major disappointment from the budget or any other global aberration, markets are likely to see some respite in the mentioned support zone any time soon,” he says.

On the upside, the bearish gap of 23,000-23,050 is likely to resist any pullbacks ahead of the event, while the formidable obstacle is present around 23,350, coinciding with the 20 double exponential moving average (DEMA).

Stocks to watch

Q3 results today: Bajaj Auto, Hyundai Motor India, Indian Oil Corporation, JSW Energy, BHEL, Bosch, Cipla, JSW Infrastructure, Suzlon Energy, TTK Prestige, TVS Motor Company, CG Power and Industrial Solutions, Colgate Palmolive, CSB Bank, Exide Industries, GMR Airports, Hindustan Zinc, Home First Finance Company, Le Travenues Technology, Mahindra & Mahindra Financial Services, Mahanagar Gas, Motilal Oswal Financial Services, Novartis India, SBI Cards and Payment Services will release their Q3 numbers today.

Meanwhile, shares of Tata Steel, Coal India, Bajaj Housing Finance, Emami, IGL, Federal Bank will be in focus after they released their earnings report post market hours yesterday.

Tata Power: The company's solar arm, TP Solar, has inked a deal worth Rs 455 crore with Maharashtra State Power Generation Company to supply 300 MWp ALMM modules for the Mukhyamantri Saur Krushi Vahini Yojana (MSKVY) 2.0 project.

Azad Engineering: The company has bagged an order from Bharat Heavy Electricals (BHEL) for the supply of advanced, high-complexity rotating airfoils for supercritical turbines.

IIFL Finance: Bharat Aggarwal has resigned from the position of Business Head of Unsecured Lending at the company, with immediate effect.

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