Indian Market Outlook – Budget Day (1 Feb 2026)
Summary
Indian equities traded on Sunday, 1 February 2026 for a special Budget Day session. The market initially rallied as the Finance Minister’s Union Budget speech focused on infrastructure spending, social schemes and tax stability. However, a sharp increase in the securities‑transaction tax (STT) on futures and options unnerved traders. Combined with profit‑booking and weak global cues, the indices erased early gains and closed sharply lower. Information‑technology and healthcare stocks provided relative support, while metals, PSU banks and energy names led the decline.
Major indices
| Index | 1 Feb 2026 close | Change | Key notes |
|---|---|---|---|
| Nifty 50 | 24,825.45 | ↓ 495.20 pts (–1.96 %) | slipped below 24,900 as derivatives‑tax hike triggered broad selling; intraday high ~25,442 and low ~24,572 |
| BSE Sensex | 80,722.94 | ↓ 1,546.84 pts (–1.88 %) | crashed from an intraday high near 82,727 to a low of ~79,899 |
| Nifty Bank | ~59,300 | ↓ ~2.0 % | PSU banks under pressure; SBI fell ~5 % |
| Nifty IT | ~38,650 | ↑ ~0.6 % | only major sector index to finish positive; Wipro and TCS gained |
| Nifty Midcap 150 | ~16,270 | ↓ 2.2 % | broader markets underperformed |
| Nifty Smallcap 250 | ~12,160 | ↓ 2.8 % | small‑caps slumped as risk appetite waned |
Advance–decline: ~1,673 stocks advanced against ~2,299 declines, indicating weak market breadth. Trading turnover surged due to heightened Budget‑day activity. Foreign institutional investors were net sellers (gross purchases ~₹7,850 crore; sales ~₹7,561 crore, net selling around ₹290 crore), while domestic funds were marginal buyers.
Sector performance
| Sector index | Direction (approx.) | Drivers |
|---|---|---|
| Information Technology | ▲ (~+0.6 %) | Defensive buying in large‑cap IT (Wipro, TCS) after muted guidance but stable budgets; rupee weakness aided export earnings |
| Pharmaceuticals/Healthcare | ▲ (~+0.3 %) | Buying in Max Healthcare, Cipla and Sun Pharma as investors sought defensive plays |
| FMCG | flat to ↓ (~–0.3 %) | Stable consumption outlook offset by profit‑taking |
| Banking & Financials | ↓ (~–2 %) | PSU banks slumped; SBI dropped >5 % after STT hike dampened derivatives trading and raised cost of capital; private banks also fell on profit‑booking |
| Metals & Mining | ↓ (~–2.5 %) | Hindalco fell ~5.8 %; global commodity weakness and cautious Chinese demand outlook |
| Energy/Oil & Gas | ↓ (~–2 %) | ONGC declined ~5.5 % as crude prices were volatile and the Budget offered little relief on fuel taxes |
| Infrastructure & Logistics | ↓ (~–2 %) | Adani Ports lost ~5 %; traders booked profits despite infrastructure push in Budget |
Top gainers and losers (large‑cap segment)
| Top gainers | Price (₹) | % change | Notes |
|---|---|---|---|
| Wipro | 241.93 | +2.12 % | IT major rallied on renewed interest in tech stocks; traded between ₹235.44 and ₹247.23 |
| Max Healthcare | 974.25 | +1.82 % | Defensive buying in healthcare amid volatility |
| TCS | 3,178.20 | +1.74 % | Optimism on FY26 order pipeline; stock touched ₹3,234 intraday |
| Cipla | 1,343.00 | +1.44 % | Pharma stocks saw steady accumulation |
| Sun Pharma | 1,609.00 | +0.86 % | Recovered from intraday lows as investors sought defensives |
| Top losers | Price (₹) | % change | Notes |
|---|---|---|---|
| Bharat Electronics (BEL) | 421.95 | –6.02 % | Heavy volumes (>10 crore shares); profit‑booking despite defence allocations in Budget |
| Hindalco Industries | 907.00 | –5.78 % | Metals sold off amid global commodity concerns |
| Oil and Natural Gas Corporation (ONGC) | 254.20 | –5.50 % | Energy stocks under pressure with crude volatility and lack of sector incentives |
| State Bank of India (SBI) | 1,020.00 | –5.31 % | Costly STT hike on derivatives and profit‑booking hit PSU banks |
| Adani Ports & SEZ | 1,347.90 | –5.06 % | Logistics and infra names slipped despite infrastructure spend in Budget |
What moved the market
- Budget‑day volatility: The Union Budget delivered higher capital expenditure, infrastructure outlays and tax stability, which initially lifted sentiment. However, the proposal to increase the securities‑transaction tax (STT) on futures to 0.05 % (from 0.02 %) and on options premium to 0.15 % (from 0.10 %) triggered a sharp sell‑off. Derivatives traders faced higher transaction costs, prompting unwinding of positions. The market fell more than 3 % from intraday highs before trimming some losses by the close.
- Profit‑booking in cyclicals: Traders took profits in public‑sector banks, metals and energy stocks after a strong run‑up into the Budget. PSU banks, which had rallied in anticipation of government capital support, reversed sharply.
- Defensive rotation: Information‑technology and healthcare names attracted buying as investors sought stability amid uncertainty. The weaker rupee and global tech resilience supported IT stocks.
- Weak global cues: Overseas markets were jittery due to geopolitical tensions and US tariff threats on European goods that were set to take effect from 1 February 2026. Global investors moved to safe‑haven assets, leading to risk‑off sentiment in emerging markets. Asian markets were mixed as China’s growth concerns persisted, and US futures were down modestly.
Global cues
- United States: Wall Street closed lower on Friday amid fears of a trade war after the US administration threatened tariffs on multiple European countries starting 1 Feb 2026. S&P 500 futures fell ~0.8 %, and investors rotated into gold and bonds. Strong US bank earnings limited the downside.
- Europe: European equities weakened as energy and metal stocks declined. The euro depreciated against safe‑haven currencies. Focus remained on inflation data and the US tariff announcement.
- Asia: Most Asian markets were cautious. Chinese equities were subdued due to regulatory concerns and weak economic data; Japanese shares were volatile amid yen strength. Crude oil prices fluctuated around US$78–80 per barrel, keeping energy stocks under pressure.
Stocks to watch (2 Feb 2026)
| Theme | Stocks to watch | Rationale |
|---|---|---|
| Budget beneficiaries | Larsen & Toubro, KNR Construct, IRFC | Increased infrastructure spending could support order inflows for construction, railway and capital‑goods companies |
| IT resilience | Wipro, TCS, Infosys | Defensive demand and weaker rupee may extend gains; watch management commentary after earnings |
| Healthcare/pharma | Max Healthcare, Cipla, Dr Reddy’s | Defensive positioning could continue as volatility persists |
| PSU banks | SBI, Bank of Baroda, PNB | Oversold after sharp fall; may see technical bounce but remain sensitive to bond yields and FII flows |
| Metals & energy | Hindalco, Tata Steel, ONGC, Coal India | Global commodity prices and China data to dictate moves; watch for bargain‑hunting after steep declines |
| New‑age & payments | One 97 Communications (Paytm) | Budget’s digital‑payment incentives and potential FDI limit increase could drive interest; stock was volatile during Budget day |
Corporate updates
- Union Budget highlights: The government announced a 14 % increase in capital expenditure, focusing on roads, railways, defence and green energy. Personal income‑tax slabs remained unchanged, and fiscal deficit for FY27 was targeted at 4.7 % of GDP, signalling fiscal prudence. Disinvestment receipts were budgeted at ₹50,000 crore, with strategic sales in select PSUs on the table.
- Regulatory changes: In addition to the STT hike, the Budget proposed to allow greater participation of non‑resident Indians (NRIs) in Indian equity markets by increasing the overall foreign investment limit in listed companies to 10 %, subject to board approval. It also raised allocations to the defence sector, renewable energy and healthcare.
- Earnings season: Several companies are set to release quarterly results in the coming week. HDFC Bank and ICICI Bank reported robust net interest income growth last week. Tata Steel, Power Grid and Hero MotoCorp are scheduled to report in the next few days; investors will watch for management commentary on margins and demand.
- Corporate actions: Adani Ports announced the acquisition of an additional stake in a logistics subsidiary, while Bharat Electronics signed a memorandum of understanding with a foreign defence manufacturer during the Aero India expo. NTPC outlined plans to add 5 GW of renewable capacity over the next two years.
Technical levels and outlook for 2 Feb 2026
The Budget‑day sell‑off pushed the indices below short‑term moving averages, leaving the near‑term trend fragile. However, oversold momentum indicators suggest the possibility of a technical bounce.
- Nifty 50: immediate support lies at 24,550–24,500; a break could extend declines to 24,300. Resistance is seen at 24,950–25,100 (gap area from Budget day) and then 25,400. Momentum indicators (RSI near 45) suggest consolidation.
- Bank Nifty: support at 59,000 followed by 58,300; resistance around 59,800–60,200. PSU banks may lead recovery if bond yields stabilise.
- Sensex: support around 80,000 with deeper support near 79,500; resistance at 81,500–82,000.
Expected tone
For Monday, 2 February 2026, the market tone is likely to be cautious. Investors will absorb the finer details of the Budget and monitor global developments, particularly the US–Europe tariff situation and China’s growth data. A relief rally is possible if global markets stabilise and bargain‑hunting emerges, but higher derivatives transaction costs and persistent FII selling could limit upside. Traders should expect continued volatility and use pullbacks to adjust positions.
Disclaimer
The stocks mentioned in this article are not recommendations. Please conduct your own research and due diligence before investing. Investment in securities market are subject to market risks, read all the related documents carefully before investing. Please read the Risk Disclosure documents carefully before investing in Equity Shares, Derivatives, Mutual fund, and/or other instruments traded on the Stock Exchanges. As investments are subject to market risks and price fluctuation risk, there is no assurance or guarantee that the investment objectives shall be achieved. Lemonn (Formerly known as NU Investors Technologies Pvt. Ltd) do not guarantee any assured returns on any investments. Past performance of securities/instruments is not indicative of their future performance.
