The Sensex and Nifty 50 indices continued their downward spiral this year, reaching their lowest levels since November 11. The Nifty 50 Index dropped for six consecutive days, reaching a low of ₹25,560, down by 3% from its highest point this year. Similarly, the Sensex dropped to ₹83,220, also much lower than last year’s high of ₹86,150.
Nifty 50 and Sensex indices to react to the SCOTUS ruling on tariffs
The blue-chip Nifty 50 and Sensex indices will react to the upcoming Supreme Court of the United States (SCOTUS) decision on Donald Trump’s tariffs against all countries.
This court will rule on whether these tariffs are legal or not, with most analysts expecting it to rule against Trump. Odds of the bank ruling in favor of Trump have dropped to 28%.
In theory, India would be the biggest beneficiary of such a ruling, as the US has maintained a 50% tariff. And last week, Trump threatened to impose a 500% levy on all goods from the country.
However, the relief rally would be short-lived as Trump has other tools to use against the country and achieve the same goal. The challenge is that such measures have some limits and are significantly lengthy.
Key Indian corporate earnings
The other key catalyst for the Nifty 50 and Sensex Index is the upcoming corporate earnings from the country. Top consulting companies, which were some of the laggards last year, will publish their results.
Tata Consultancy Services, the second-biggest IT consulting company after Accenture, will be the first one to release its earnings on Monday. HCL Tech, a company valued at over $46 billion, will also release its numbers on Monday.
Infosys and Wipro will release their numbers on Wednesday and Friday, respectively. These numbers will provide information on whether the IT consulting industry returned to growth.
At the same time, the results will show the impact of Donald Trump’s decision to increase the cost of H1-B visa to $100,000 last year. These companies, especially TCS and Infosys will be the most affected by these changes.
More Indian companies like Jio Financial Services, Reliance Industries, Tech Mahindra, ICICI, HDFC, and Yes Bank will release their numbers this week.
These results come on the same week that the US earnings season kicks off, with the biggest banks publishing their numbers.
India macro data and impact on the RBI
Meanwhile, Indian stocks will react to the upcoming macro data from India, which will have an impact on the Reserve Bank of India (RBI). The first key data to watch will be the upcoming inflation report, which will be released later on Monday.
Economists expect the data to show that the headline Consumer Price Index (CPI) rose from 0.71% in November to 1.50% in December. Such an increase means that the RBI may slow down its interest rate cuts. It recently slashed the benchmark rate from 5.50% to 5.25% as inflation retreated.
Nifty 50 Index has formed a risky pattern
The daily chart shows that the Nifty 50 Index has formed a highly bearish pattern. It formed a double-top pattern at ₹26,370 and a neckline at ₹25,700, its lowest level in December.
The index has moved below the 50-day Exponential Moving Average (EMA). Also, the Relative Strength Index (RSI) and the MACD have pointed to more downside.
It has moved below the strong pivot reverse level of the Murrey Math Line. Therefore, the most likely outlook for the index will be bearish, with the next target to watch being at ₹25,000.
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