Any proposals on taxation of investments relating to capital market to be keenly watched

New Delhi, Jan 31 (IANS) The Fed decision tonight (Wednesday night) and the interim Budget tomorrow (Thursday) will weigh on markets in the near-term, says V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.

Global markets will be keenly watching the Fed comment on the timeline and quantum of rate cuts. The first rate cut is likely to come in June 2024. The decline in the 10-year yield to 4.02% is positive since it will restrain FPI outflows, he said.

The domestic market will be focused on the interim Budget particularly on any proposals regarding taxation of investments relating to the capital market. The fiscal deficit and its glide path also is important since growth with stability is hugely important from the market perspective, he said.

Stock specific movements are likely in response to sectoral allocations in the Budget, he added.

Deepak Jasani, Head of Retail Research, HDFC Securities said the US Fed is widely expected to announce on Wednesday that it is sticking to its current benchmark interest rate, with questions remaining over when rate cuts will finally come.

The IMF announced on Tuesday it has raised its 2024 global growth forecast to 3.1 per cent, citing unexpected "resilience" in major advanced and emerging market economies around the world. The updated figure, released in the latest World Economic Outlook (WEO) report, is 0.2 percentage points higher than the International Monetary Fund's previous forecast in October. The International Monetary Fund (IMF) has raised its 2024-25 GDP growth forecast for India by 20 basis points to 6.5 per cent, although it continues to trail the expectations of Indian authorities.

China’s factory activity contracted for a fourth consecutive month in January, underscoring the much-needed litany of policy support for the world’s second-largest economy which Beijing announced last week. The official manufacturing purchasing managers’ index rose slightly to 49.2 in January from 49 in December. The official non-manufacturing managers’ index rose to 50.7 in January from 50.4 in December

Asian stocks edged lower with the latest data from China underscoring the economy’s weakness, he said.

Jasani said Nifty ended lower in a volatile session on January 30. At close, Nifty was down 0.99% or 215.5 points at 21522.1. Nifty has been displaying a one-day up-day-down pattern for at least the last 7 sessions. This shows the indecision on the part of investors and traders ahead of the vote on the account and the US Fed meeting. Nifty has formed a bearish dark cloud cover pattern on daily charts. It could now face resistance at 21813 while 21429 could offer support.

BSE Sensex is trading at 71,568.69 points, up 428.79 points or 0.60 %. Tata Motors is up 2.6 per cent at Rs 881 at a 52-week high. Sun Pharma, M&M are up 2 per cent.