Stock Market Analysis 31 Jan 25 : Watch FIIs, IPOs and Technical Indices

Stock Market Analysis 31 Jan 25

Evening(Stock Market Analysis 31 Jan 25) Stock Market Analysis and Upcoming Budget Prospects

In today’s session, the Sensex closed with a gain of 741 points at 77,501, while the Nifty surged 259 points to reach 23,508. Bank Nifty also recorded an increase of 275 points, closing at 49,587. The key question now is: What will be the market trend in the upcoming sessions? This analysis will provide an in-depth review of today’s market activities and the potential impact of the upcoming budget.

Today's Market Activities: A Comprehensive Overview

The market exhibited significant positivity in today’s trading session. There was broad-based buying from the beginning, followed by a brief pullback. Despite this, the market maintained its strength until closing. A crucial question is whether the budget's potential impact will be favorable or unfavorable for the market. Let’s analyze these aspects.

Investor Expectations and Policy Possibilities in the Budget

Revisions in the tax structure related to the stock market have always been a concern for investors. Speculations are being made particularly about the Long-Term Capital Gains (LTCG) tax. If the LTCG tax rate is reduced to zero for investments exceeding three years or if tax relief is provided for a two-year holding period, it would be a positive factor for the market. However, this possibility appears to be low, though investors are keeping an eye on potential policy changes.

What if Tax Relief Possibilities Are Minimal?

If the government does not reduce the LTCG tax, it could be a negative signal for market participants. However, if tax rates are increased, it could have a significant impact on the market. At present, no major financial institution or media outlet has discussed the possibility of a tax hike. However, if such a development occurs, a sharp market decline cannot be ruled out.

Market Volatility: Economic and Policy Perspectives

Many investors believe there is a possibility of a market downturn. However, from a long-term perspective, the market has shown a growth of 10% to 12.5% in the past year. After the previous LTCG tax hike, there was an initial shock, but the market quickly recovered and regained stability. A similar trend may be observed after this budget as well.

Potential Changes in the Income Tax Structure

There is widespread discussion about possible changes in the income tax structure. Analysts believe that the government may introduce tax slab relief for the middle-class and salaried segments. Recent statements from Prime Minister Narendra Modi have further strengthened investor expectations in this regard.

However, the government may prioritize indirect taxes over direct taxes. For instance, the current tax burden on vehicle purchases is nearly 50%. Instead of offering personal tax exemptions, the government might focus on measures that encourage consumption.

Impact of Option Trading and Potential Tax Hikes

The government may consider increasing the Securities Transaction Tax (STT) to regulate option trading. STT revenue has grown from ₹25,000 crore to ₹45,000 crore over the past few years. If the budget includes an STT hike, it could negatively impact option trading and overall market liquidity.

Prospects for Startups and the MSME Sector

There are high expectations that the government will provide special incentives for startups and the Micro, Small, and Medium Enterprises (MSME) sector. If tax relief or financing schemes are announced for this sector, it would be a positive sign for the market.

Technical Analysis: Market’s Possible Movement

In recent sessions, the market has consistently shown a positive trend. The Nifty has surpassed the 22,700–22,800 levels, while the 22,500 level remains a crucial technical support. If this level is breached, a significant market downturn may occur. However, at present, the market trend remains stable.

FII/FPI & DII Update

One important aspect to consider is the continuous selling by FIIs (Foreign Institutional Investors). Today, they have sold approximately ₹1,188 crores, showing significant activity on their part. Typically, their buying value remains around ₹10,000 crores, while their selling value is usually close to ₹11,000–₹15,000 crores. This time, the sell value remains the same, but the buy value is also substantial.

The question arises: if the budget is scheduled for tomorrow, why are they selling today? Even the buying side seems a bit uncertain. If you observe, railway and PSL stocks have surged today. This suggests that some investors might be exiting their positions. The most important factor to note here is that net short positions are close to 89%, mostly from FIIs. This doesn’t mean they won’t increase further; they could go up to 90%, 92%, or even 95%. However, historically, whenever net short positions have reached 89–90%, the market has witnessed a strong upside movement.

For instance, in November 2023, the market (specifically Nifty) surged by 6%, including small-cap and mid-cap stocks. During that period, a major market rally occurred due to FII short covering. The market had a high number of short positions, and when FIIs started covering them, the market shot up.

There were two major triggers for this rally:

The BJP’s victory in state elections with a strong majority, which increased market optimism about their potential win in the upcoming general elections.
The US Federal Reserve’s dovish and positive stance, which boosted investor confidence.

If we analyze this situation carefully, the FII’s selling positions acted as a catalyst for short covering, just like a chemical reaction that needs a catalyst to speed up. When FIIs bet against the market but unexpected news or positive triggers emerge, they rush to cover their short positions, leading to a market rally.

Now, we are in a similar situation. Whenever there is news contrary to FII expectations, the market could rise again. The key question is: where is the catalyst this time?

It should ideally come from the Union Budget.
If the budget announcements act as a catalyst, FIIs might be forced to cover their short positions, leading to a strong market rally.
However, if the budget disappoints, the market could witness a decline.

Despite short-term fluctuations, investors shouldn’t worry, as the market will grow in the long run. Many stocks have already seen significant appreciation. However, some investors are currently facing losses, leading them to feel trapped. This is a psychological effect—when earlier profits start turning into losses, people panic.

But we need to focus on long-term fundamentals. If a company continues earning crores of rupees, expanding its business, and performing well, its stock price will eventually reflect that growth. Stock price movements are a by-product of a company’s business performance, not the other way around. Investors should focus on the company’s financial projections and profitability rather than short-term price fluctuations.

Retail investors are showing strong participation, with daily trading volumes close to ₹1.5 lakh crores. Many argue that while retailers have invested heavily in 2024, FIIs have been selling and exiting the market. The question remains:

Who is really getting trapped?
Are FIIs exiting at the right time, or are retail investors entering at the wrong time?

Some fear that India’s growth might slow down, but looking at the broader picture, India is continuously progressing in multiple sectors. Challenges exist—especially for the lower and middle class—but India is striving to grow despite these hurdles.

Our country has immense potential, and we are now reaching a stage where Indian companies are acquiring global businesses. Just because we are part of this system, we sometimes underestimate India’s growth potential. But in the coming years, India will see remarkable development.

This is my personal view, and Trump’s possible return to power in the US could also play a role in global market trends.

BRICS Update :-

Trump is making very interesting statements. He has clearly said that he is going to impose tariffs on BRICS members. Since India is also a part of BRICS, this decision could impact India as well. If BRICS nations take any action against the dollar, we will have to bear the consequences. This is the problem with Trump—he repeatedly makes sensational statements.

This is the first time he has reacted on this issue. But when a leader repeats the same statement two or three times, the market doesn’t pay much attention. This is the fourth or fifth time Trump has made such comments. Earlier, he also made strong statements regarding BRICS nations, Mexico, and Canada.

From February 1, the 25% tariffs will be removed. Usually, the U.S. considers Canada and Mexico together in trade matters, but Trump’s statements can impact investments. U.S.-Canada trade is around $800 billion, and U.S.-Mexico trade is also nearly $800 billion. Trump claims that the U.S. does not need to buy anything from Canada because it already has those resources from elsewhere. Hence, he is imposing tariffs.

A global leader doesn’t usually make such statements so easily—except for Trump. He frequently makes bold and sensational remarks.

Data Center Update :-

Now, let me share another crucial update regarding data centers. Many investors have put their money into data center stocks, and recently, after Meta, Microsoft, Apple, and Tesla posted their financial results, there have been several statements regarding data center investments.

Microsoft is set to spend approximately $80 billion on data centers and AI infrastructure.
Meta is planning to invest $65 billion in infrastructure.

This clearly shows that massive investments are being made in AI and data centers.

Mark Zuckerberg was asked whether Deep Seek AI, which can run on fewer data centers and GPUs, poses a potential risk. However, he clarified that the world still lacks sufficient AI infrastructure, which is why these companies will continue investing.

India currently does not have enough infrastructure for AI and data centers. However, AI, chip, and data center-related stocks have shown stability.

Regarding long-term and short-term capital gains tax, there are no strong expectations of a reduction. But how the budget will impact corporate tax, the middle class, salaried individuals, and other sectors remains to be seen.

Union Budget 2025 Update :-

It is crucial to understand how the Union Budget 2025 will impact the market. We must also analyze how previous budgets affected the market to anticipate this year’s reaction.

The main budget speech begins at 11:00 AM.
The budget speech usually lasts between 90 minutes to 2.5 hours.
The 2020-21 budget speech lasted 2 hours and 42 minutes, the longest in Indian history.
The 2021-22 budget was the first paperless budget.

The market typically reacts differently before and after the budget. If the market rises a day before the budget, it may fall on budget day, and vice versa.

I will provide a detailed analysis of past budget data, which will be available in PDF format on WhatsApp and Telegram channels. You can download and compare historical data to understand market trends.

Additionally, Prime Minister Narendra Modi recently made an important statement:

"I pray to Goddess Lakshmi that the poor and middle class receive her grace and blessings and that good things happen to them."

This statement has sparked speculation that this year's budget might include significant benefits for the poor and middle class

.

Economic Survey 2025 Update :-

Before every budget, the Economic Survey is released, analyzing India's economic performance. This year's Economic Survey is a 482-page document that provides a detailed outlook.

The word "India" is mentioned 1,275 times in this report.
The word "Growth" appears 648 times.
Other key mentions include "Infrastructure" (431 times), "Development" (269 times), "Production" (459 times), "Manufacturing" (191 times), and "Agriculture" (150 times).

This year’s economic report focuses heavily on growth and AI-related developments.

The survey also covers global economic conditions, India's GDP growth, fiscal deficit, monetary policies, trade and investments, foreign investment, inflation, and key sectors.

The IT, pharma, and services sectors are performing well, while agriculture is also showing positive growth.

I will share the complete Economic Survey document on WhatsApp and Telegram channels. If you want to review the data in detail, you can find the links in the comment section.

Tata Motors Ltd. Update :-

Tata Motors' stock recently witnessed a decline, and many investors are asking about it. We already have clarity that Tata Motors' financial results were below expectations. However, if we look at the last six months or one year, the stock has already corrected nearly 40% from its highs.

This is a large-cap stock with a market capitalization in the billions. If such a large-cap stock has fallen 40%, will it perform well in the coming quarters? This is a key question in the market.

A note released by CLSI states that Tata Motors' stock has been performing well at current levels and looks attractive. The current valuations already factor in the weaker quarters ahead, meaning that for FY25 and FY26, the company may not show strong results. However, improvement is expected in FY27.

But the main point is that the stock has already fallen 40% from its peak. If the market had expected a significant rise, the stock wouldn’t have dropped this much. Therefore, the weak sentiments are already reflected in the stock price.

If you are concerned about any particular stock, post your query in the comment section. I am keeping a list of companies that investors frequently ask about and will discuss them in upcoming blogs.

IPO Updates :-

Shares worth approximately ₹80,000 crore are coming out of the IPO lock-in period. If you are already invested in these companies, this is an important update for you.

I have mentioned multiple times before that when the IPO lock-in period ends, stocks tend to fall. If I were to invest, I would wait for this period to pass so that I could buy stocks at lower prices.

A list of companies and their lock-in period expiration details is displayed on the screen.

₹80,000 crore worth of shares will be unlocked in February. If possible, take a screenshot for reference.

Ola Electric Update :-

Ola Electric has recently launched Gen 3 electric scooters with a range of 320 km. The pricing and specifications of these new models are displayed on the screen.

Ola Electric is once again emerging as the No.1 player in the two-wheeler EV segment in January 2025.

Earlier, their market share was close to 50%, but in recent months, it dropped to 22-23%.
Now, they are regaining a 25% market share.
Strong sales of 22,656 units have been recorded, with a 65% month-on-month growth.

Ola Electric’s CEO, Bhavish Aggarwal, stated that although their market share declined due to competition, they are now focusing on strong growth with new vehicle launches.

The positive statements from Ola Electric regarding their improved range and pricing are the key reasons why the stock surged significantly on NSE today.

Wockhardt Ltd. Update :-

While the U.S. is advancing GPT AI and China is working on Deep Search AI, India is making significant breakthroughs in pharma and healthcare.

Indian scientists have always been strong in the pharma and IT sectors. Recently, Wockhardt has developed a new drug called 'Jainich', which is designed to treat multi-drug-resistant bacteria.

This drug is especially useful for cancer patients, who often suffer from severe antibiotic-resistant infections.
Common infections like urinary tract infections (UTIs), pulmonary infections, and lung-related infections become resistant to antibiotics over time.
Jainich has demonstrated a 96.8% clinical cure rate in trials.
After successfully passing Phase 3 clinical trials, Wockhardt will file an NDA (New Drug Application) with the US FDA.

If approved, this drug will be commercially sold worldwide and could be a major success for Wockhardt.

Pharma Stocks Update :-

Which sectors will receive the most attention in the upcoming Union Budget 2025?

Infrastructure sector always remains a key focus, and this time will be no different.
Power sector announcements could also impact relevant stocks.
Textile and affordable housing sectors may receive government support.
Pharma and healthcare could see major policy changes.

If medical tourism receives any major announcements, companies like Apollo, Max Healthcare, Aster DM Healthcare, KIMS, and Jupiter Life Line Hospitals will benefit.

Railway and defense stocks may also gain traction.

IRCON Ltd. Update :-

IRCON recently secured a ₹631 crore EPC contract in Manipur, which has contributed to the stock’s growth.

The project involves a 74% stake by AM Reel and a 26% stake by IRCON.
IRCON’s share of the project is valued at ₹164 crore.

Additionally, potential railway-related announcements in the budget could lead to strong momentum in IRCON's stock.

Navin Fluorine International Ltd. Update :-

The company has shown improvement in revenue, margins, and profitability.
Year-on-year and quarter-on-quarter growth has been positive.
The management has provided a strong outlook, expecting to maintain a 25% margin.
Jefferies has raised its target price, boosting the stock’s performance.

Tata Consumer Products Update :-

The company’s top line has grown by 17%.
However, higher finance and amortization expenses have impacted profitability.
Compared to other FMCG players, Tata Consumer’s numbers are relatively stronger.

Kalyan Jewellers Ltd. Update :-

The company’s revenues have grown by 39.5%, but profits increased by only 21.16%.
If not for losses related to custom duties, profit growth would have been close to 44%.
The company is planning to launch 30 new Kalyan showrooms and 15 Candere showrooms in Q4.

Recently, the stock had fallen due to negative sentiment, but it has now started recovering.

UPL Ltd. Update :-

Instead of quarter-on-quarter comparisons, look at year-on-year data.
Revenue growth of 10% has been recorded.
The company has turned profitable from losses in the previous quarter.
UPL has posted strong profitability this time.

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