Stocks – Indian Markets Open Higher, Recovering Part of Budget Day Losses

Stocks – Indian equity benchmarks began the week on a positive note on Monday, clawing back a portion of the sharp losses recorded during the Union Budget session, even as weak global signals continued to weigh on investor sentiment. Early trade reflected cautious optimism, supported by selective buying in heavyweight stocks.

By 9:33 a.m., the BSE Sensex was up 373 points, or 0.46 percent, trading at 81,096. The NSE Nifty also moved higher, gaining 87 points, or 0.35 percent, to reach 24,913. The early rebound suggested that investors were reassessing the previous session’s sharp reaction to Budget announcements rather than responding to overseas market trends.

Broader Market Remains Under Pressure

Despite gains in the benchmark indices, the broader market struggled to keep pace. Mid- and small-cap stocks continued to face selling pressure, indicating risk aversion among investors. The Nifty Midcap 100 index slipped 0.50 percent, while the Nifty Smallcap 100 declined 0.85 percent in early trade.

Market participants noted that broader segments have been more vulnerable in recent weeks due to valuation concerns and reduced appetite for riskier assets. This divergence between frontline indices and broader markets highlighted selective buying rather than a broad-based recovery.

Sectoral Trends Show Mixed Performance

Sector-wise, most indices were trading in negative territory during the morning session. Consumer durables and information technology stocks were among the biggest laggards, with declines of around 1 percent and 0.61 percent, respectively. These sectors faced pressure amid concerns over demand outlook and global technology spending.

In contrast, metal, realty, and oil and gas stocks offered some support to the market. Gains in these sectors helped cushion the overall indices, supported by firm commodity prices and expectations of steady domestic demand.

Key Technical Levels in Focus

Market analysts pointed to important technical levels that could guide near-term movement. Immediate support for the Nifty is seen in the 24,650 to 24,700 range, while resistance is placed between 24,950 and 25,000. A decisive move beyond these levels may determine whether the current recovery can sustain or face renewed selling pressure.

Traders were advised to remain cautious, especially given the mixed global cues and lingering uncertainty following the Budget announcements.

Budget Reaction Seen as Short-Term Adjustment

According to analysts, the sharp selloff witnessed on Budget Day was largely a knee-jerk reaction to the increase in securities transaction tax on futures and options trades. They emphasized that the move was not primarily aimed at boosting government revenue but at discouraging excessive participation by retail investors in complex derivatives trading.

Data suggests that a large majority of retail traders incur losses in the futures and options segment, prompting regulators and policymakers to introduce measures aimed at reducing speculative activity. Some sections of the market had also been expecting changes to long-term capital gains tax, which did not materialize, adding to initial disappointment.

Growth Outlook Remains Supportive

Economists noted that the Budget’s projection of 10 percent nominal GDP growth appears achievable under current conditions. If realized, this could translate into earnings growth of around 15 percent in the financial year 2026–27. However, experts cautioned that a sustained market rally may take time and could depend on shifts in global investment themes, including a potential cooling of the artificial intelligence-driven trade overseas.

Global Markets Weigh on Sentiment

Asian markets largely traded lower on Monday as investors reacted to private data indicating subdued factory activity in China for January. The Shanghai Composite fell 1.32 percent, while the Shenzhen index declined 1.41 percent. Japan’s Nikkei dropped 0.52 percent, Hong Kong’s Hang Seng index slid 2.15 percent, and South Korea’s Kospi saw a sharp fall of 4 percent.

Overnight, US markets also closed mostly lower. The Nasdaq Composite dropped 0.94 percent, while the S&P 500 and Dow Jones Industrial Average fell 0.43 percent and 0.36 percent, respectively.

Institutional Activity Remains Cautious

On February 1, foreign institutional investors sold equities worth Rs 588 crore on a net basis. Domestic institutional investors were also net sellers, offloading shares worth Rs 683 crore. The continued selling by both investor groups underscored the cautious stance prevailing in the market.