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Nifty on the Daily Chart

This weekend is an unusual one because it is an extended trading week, with the Union Budget scheduled on Sunday. Adding to the uncertainty, late on the night of 30th January, there was a sharp crash in the precious metals space, which has caused significant nervousness across markets. What we witnessed was a classic liquidation event — margin calls triggering forced selling, leading to a sudden and violent unwinding of leveraged positions. Silver, in particular, collapsed nearly 35% overnight, while gold also fell sharply from its recent highs. From a historical perspective, this ranks among the largest liquidation events since the 1980s, underscoring how stretched positioning had become.

The broader context here is extremely important. A new Federal Reserve Chair is set to take charge, and social media is flooded with clips and commentary portraying him as aggressively hawkish — with phrases like “let assets crash” and “a phoenix will rise from the ashes” doing the rounds. However, this interpretation misses a key political reality. This individual has been brought in by President Trump specifically to counter the existing Fed stance, which Trump believes has failed to cut rates aggressively enough. In my view, there is very little doubt that this new Fed Chair will ultimately cut interest rates, and it is somewhat baffling that markets are currently reading him as hawkish rather than accommodative.

Sunday’s Budget session itself is likely to be chaotic for markets. International markets will be closed, which means ETF pricing — especially for gold and silver ETFs — will be based on assumptions rather than real-time global price discovery. On top of that, there is the possibility of changes in import duties on precious metals, which could cause sharp mispricing in ETFs during Sunday’s session. ETF-NAV dislocations are therefore a major risk. What’s also striking is how subdued market sentiment is heading into the Budget. This raises the question: does the market already believe that the Budget will be disappointing? FIIs have not covered their short positions ahead of the Budget, which suggests positioning is skewed toward downside expectations. Ironically, this also sets the stage for a sharp upside surprise if even modestly positive announcements are made. Markets often surprise when consensus is heavily tilted one way — just as we recently saw in precious metals. In my view, even relatively simple measures — such as reducing STT without touching LTCG, or increasing middle-class tax slabs — could materially boost consumption without straining the fiscal balance. The real trigger will arrive on Sunday, and we’ll soon see the direction the Finance Minister chooses.

Nifty – Weekly Chart Perspective

On the Nifty chart, the market has remained locked within a 300–400 point range over the past seven sessions. Despite all the noise, Nifty is still up about 1% for the week. We are hovering right around a trend line that was broken last week and are now attempting to stabilize near it. Technically, this places the index in a neutral zone. A major negative surprise could push Nifty sharply lower — even toward 22,000 — while a positive trigger could just as easily send it to fresh highs.

S&P 500 Overview

Meanwhile, the S&P 500 continues to look remarkably resilient, regardless of the chaos elsewhere. The US government, notably, shut down last night, adding yet another layer of political drama. On top of that, the US–Iran conflict has officially begun, turning the global backdrop into what can only be described as a circus. Despite all this, the S&P 500 still managed a 0.34% gain for the week, highlighting how insulated US equities currently appear.

GOLD Overview

Gold, however, ended the week down 1.77%, and this is where context becomes crucial. Many investors anchor emotionally to the recent highs — around ₹1,80,000 per 10 grams — and view the current level of roughly ₹1,52,000 as catastrophic. In reality, this represents a 17–18% correction from the top, but only a 1.7% decline from last week’s close. When you zoom out, the move is far less dramatic. Even a drop toward ₹1,20,000 would still not invalidate the long-term trend. Only a decisive break below that zone would suggest genuine structural damage. Corrections of this nature are normal after massive multi-year rallies, and late entrants inevitably feel the most pain — that is simply how markets work.

Dollar Index Overview

The Dollar Index rebounded strongly this week, forming a pin-bar style candlestick around the 95 level, suggesting a potential short-term bottom. This has unsettled markets because many had assumed the dollar breakdown would continue. Complicating matters further, the new Fed Chair will only formally take office in May, leaving three to four months of policy uncertainty. This interim period is likely to remain volatile as markets try to price in an unclear monetary path.

Global Indices Overview

Looking at global equity performance in dollar terms, Canada and the US Russell 2000 were the weakest performers this week, both down around 2%. FTSE and Brazil emerged as relative winners, while Nifty managed a 0.9% gain, showing some resilience despite domestic uncertainty.

Global Momentum

In terms of global momentum rankings, Brazil, the UK, and China currently lead, while Europe and India sit at the bottom of the table. This reinforces the idea that capital is selectively rotating rather than flowing broadly.

Benchmark Indices Overview

Domestically, benchmark indices posted decent gains, ranging roughly between 1% and 3%, spanning large caps through small caps.

Sectoral Overview

In the sectoral review, defense stocks surged nearly 8.8%, driven by headlines around the EU deal. While the agreement is symbolically important, it is worth remembering that such deals often take years — sometimes decades — to be fully ratified and implemented. This rally may therefore be more about signaling strength to the US than immediate economic impact. Energy, CPSEs, and PSEs also moved sharply higher, a pattern commonly seen ahead of Budgets due to divestment expectations. Real estate rebounded about 3.5%, though the broader trend remains weak — down 17.7% over three months and 13.4% over one year. Interestingly, real estate slowdowns often coincide with peaks in metals, which may also be playing out here.

The sectoral momentum score shows PSU banks firmly at the top, followed by metals and CPSEs. At the bottom sit real estate, FMCG, and tourism. FMCG’s persistent weakness is particularly concerning, as it often serves as a proxy for mass consumption and economic health. When FMCG underperforms, it signals that consumer demand is under strain — and that is not a comforting signal for the broader economy.

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Rebalance Update

Note : Rebalance update for both weekly & monthly rebalanced strategies will be updated here by tomorrow end of day (01 Feb 2026) post Budget session.