Indian equity benchmarks opened higher on Monday, staging a partial recovery from the sharp losses witnessed on Budget Day, even as global markets across Asia-Pacific remained under pressure. The rebound suggested that Friday’s selloff was largely a short-term reaction rather than a shift in the broader market outlook, according to market participants.
At around 9:33 am, the BSE Sensex was up 373 points, or 0.46 per cent, at 81,096, while the Nifty 50 gained 87 points, or 0.35 per cent, to trade near 24,913.
Broad Markets Underperform, Select Sectors Show Strength
Despite the headline indices trading in the green, broader markets continued to face selling pressure. The Nifty Midcap 100 slipped 0.50 per cent, while the Nifty Smallcap 100 fell 0.85 per cent, indicating caution among investors beyond large-cap stocks.
Sectorally, the mood remained largely subdued. Most indices were trading lower, with consumer durables and IT stocks emerging as key laggards, declining around 1 per cent and 0.61 per cent respectively. However, metal, realty, and oil & gas stocks bucked the trend, providing limited support to the benchmark indices.
Budget-Day Selloff Seen as Knee-Jerk Reaction
Market analysts attributed Friday’s sharp decline primarily to a knee-jerk reaction following the increase in Securities Transaction Tax (STT) on futures and options (F&O) trades announced in the Union Budget.
According to experts, the move was not intended to boost tax revenues but rather to discourage excessive retail participation in complex derivatives trading, where data shows a majority of individual investors incur losses. Some disappointment also stemmed from unrealistic expectations of changes to long-term capital gains (LTCG) tax, which were not addressed in the Budget.
Growth Outlook Remains Supportive
Analysts noted that the 10 per cent nominal GDP growth projection for FY27, outlined in the Budget, appears achievable and could potentially translate into around 15 per cent corporate earnings growth. However, they cautioned that a sustained market rally may take time, particularly amid global uncertainties and shifting trends in technology and AI-led trades worldwide.
From a technical perspective, immediate support for the Nifty is seen in the 24,650–24,700 range, while resistance is placed between 24,950 and 25,000, indicating a narrow trading band in the near term.
Global Markets Weigh on Sentiment
Asian markets largely traded lower in the morning session, reflecting concerns over fresh private data pointing to weak factory activity in China during January.
-
China’s Shanghai Composite fell 1.32 per cent, while Shenzhen declined 1.41 per cent
-
Japan’s Nikkei slipped 0.52 per cent
-
Hong Kong’s Hang Seng Index dropped 2.15 per cent
-
South Korea’s Kospi plunged nearly 4 per cent
Overnight, US markets also ended lower, adding to the cautious global tone. The Nasdaq declined 0.94 per cent, while the S&P 500 and Dow Jones slipped 0.43 per cent and 0.36 per cent, respectively.
FIIs, DIIs Continue to Sell
On the institutional front, selling pressure persisted. On February 1, foreign institutional investors (FIIs) were net sellers of Indian equities worth ₹588 crore, while domestic institutional investors (DIIs) sold shares worth ₹683 crore, data showed.
Outlook
While Monday’s early gains suggest that markets are stabilising after the Budget-related shock, analysts believe near-term volatility is likely to persist, influenced by global cues, institutional flows, and how investors reassess policy measures announced in the Budget.
For now, the recovery indicates that investors are beginning to separate short-term sentiment-driven reactions from longer-term fundamentals, keeping the focus firmly on earnings growth and macroeconomic stability.