CAUTION AHEAD

A series of events in the first few weeks of the New Year could shape the trajectory of the equity markets, especially the Trump administration's policies

- RAHUL OBEROI

EVERY JANUARY equity investors tend to tread cautiously, not the least because of the historical trend of negative returns in the first month of the year. Over 20 years, the benchmark NSE Nifty 50 index has declined on 13 occasions during this month.

Perhaps they will be even more circumspect this year considering the series of major events that are set to shape the trajectory of the markets over the next few months. First, there's the swearing-in ceremony of Donald Trump as the US President on January 20, an event that is expected to mark the beginning of a significant shift in global market sentiment. It will be followed by a possible delay in aggressive rate cuts by the US Federal Reserve and the Union Budget on February 1.

Market watchers believe investors could be jittery. G. Chokkalingam, Founder of Equinomics Research, an equities research firm, says, "We expect the first two quarters of 2025 to remain subdued for the Indian equity market. A weaker rupee, a possible delay in rate cuts by the US Fed, and the forthcoming Budget would delay the return of foreign institutional investors (FIIs) to Indian equities."

Overall, despite FIIs selling shares worth ₹1.15 lakh crore in October and November, they bought equities worth ₹3,460 crore in 2024 till December 27. In comparison, their net investment stood at ₹1.71 lakh crore in 2023. Meanwhile, the rupee declined 3% YTD to an alltime low of nearly 85.82 against the dollar on December 27.