Indian equity markets broke a two-day losing streak on Tuesday as investors bought stocks at lower levels. However, markets today may see a weak opening, following unfavorable signals from other Asian markets. Investor sentiment could remain cautious as Foreign Institutional Investors (FIIs) offloaded shares worth ₹1,491.46 crore on January 7.

Economic Concerns:
The Indian economy is projected to grow at 6.4% in FY25, a four-year low and below the RBI’s estimate of 6.6%, as per the First Advance Estimates by the NSO. This is a significant drop compared to the 8.2% GDP growth recorded in FY24. Infrastructure investments are expected to slow in FY25 due to reduced government capital expenditure and tepid private investments.

Key Market Developments:

• The NSE will add six new stocks to the F&O segment effective January 31, 2025, including Castrol India, Gland Pharma, NBCC, Phoenix Mills, Solar Industries, and Torrent Power.
• Banking stocks may witness activity as India Ratings forecast a moderation in banks' profitability in FY26 due to higher unsecured credit costs.
• Auto stocks are under pressure as FADA data shows declining sales in all segments except tractors, with two-wheeler sales down by 18%.
• IT stocks are in focus as the Q3FY25 earnings season begins, with major players like TCS, Infosys, HCL Technologies, and Wipro expected to post modest Y-o-Y revenue growth of 0.1% to 7%.

Global and Domestic Cues:
US markets ended lower on Tuesday, with higher Treasury yields signaling fewer expected rate cuts by the Federal Reserve. Asian markets mirrored Wall Street’s losses, adding pressure on Indian markets.

Back home, the Sensex rose by 234.12 points (0.30%) to 78,199.11, and the Nifty gained 91.85 points (0.39%) to close at 23,707.90 on Tuesday. Investor confidence was boosted by Prime Minister Modi’s meeting with US NSA Jake Sullivan, highlighting advancements in India-US strategic ties.

Health Concerns and Market Reactions:
Market sentiment dipped briefly amid reports of five human metapneumovirus (HMPV) cases in India, a respiratory illness also identified in China and Malaysia. However, the markets regained traction, aided by ICRA’s report that securitization volumes surged 80% year-on-year to ₹68,000 crore in Q3FY25.

Despite challenges, positive cues such as the expected release of special assistance to states by the Centre kept the momentum steady, with the financial system on track for increased securitization activity in FY25.