Market Overview: January 2025 Fourth Consecutive Month of Negative Closing: Post Market Report – 30th January 2025 : January has been a particularly tough month for the markets, marked by significant declines, especially in mid and small-cap stocks. While global markets remained near all-time highs, India’s market faced a severe drop, largely driven by weak performance in midcaps and small caps, with some mutual funds losing 15-20% in a single month.
Corporate Results Divergence
One of the most unusual aspects of the market this month has been the divergence in corporate results. In the IT sector, for example:
- TCS’s results led to a price increase,
- Infosys showed a price decline,
- Wipro’s results pushed prices up,
- Tech Mahindra saw a price drop.
Similarly, in the banking sector:
- HDFC Bank saw price movement up and then down,
- ICICI Bank continued to show upward movement,
- Bajaj Auto’s results led to a sharp price increase, but Tata Motors’ results led to a 7% drop.
This divergence is unusual and demonstrates the unpredictability of the market.
FII Selling & Market Sentiment
Foreign Institutional Investors (FII) have been selling heavily, with a total of ₹86,000 crore sold in January alone. In comparison to last October’s ₹1,15,000 crore, this selling activity indicates a high level of uncertainty. Over the past 12 months, including January, FIIs have sold a total of ₹3,86,000 crore, signaling something is amiss with the market.
Market Movements
Despite the heavy selling, the market showed resilience today, with a notable intraday recovery after a 150-point dip in the Nifty. The market closed near the highest point of the day, offering hope for February.
The Budget & Market Outlook
The upcoming budget is expected to be a pivotal moment for the market. If the budget is unfavorable, the stock market might struggle for the next year. However, if the budget is positive, it could revive market sentiment.
Key areas that could boost sentiment include:
- Reduction in fuel taxes (petrol/diesel),
- Cuts in long-term and short-term capital gains taxes,
- Other fiscal measures to support economic growth.
Trading Strategies for February
In light of these expectations, I have created several bullish strategies, with the primary focus on market recovery post-budget. Here are a few trades I’ve made:
- Call Option Strategy:
- Bought 23,300 Call Options (January series) at ₹30 and sold for ₹0, making a ₹3 profit.
- Used the proceeds to buy a 24,000 Call Option (February series) at ₹47, which has appreciated to ₹75.
- Put Option Strategy:
- Sold 22,000 Put Options and used the proceeds to buy 24,000 Call Options and 25,000 Call Options, anticipating market movement in favor of my position.
Despite the risks, I’m positioning myself bullishly, hoping for a positive budget outcome. Even if there are losses, I am prepared to manage them as a trader.
Global Cues & Conclusion
Global markets are relatively stable, and while the US market faced declines yesterday, India’s market managed to stay resilient. The real focus is now on the upcoming budget and its potential to shape market sentiment. If the Finance Minister announces favorable measures, I stand to make a profit, contributing more taxes to the economy—a win-win scenario.
Let’s hope for a favorable outcome, both for the market and for individual investors.
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