The Indian stock market is poised for a significant trading session on Sunday, February 1, as investors eagerly await the presentation of the Union Budget for 2026-2027. Finance Minister Nirmala Sitharaman is scheduled to present the budget in the Lok Sabha today, leading to heightened anticipation and expected volatility in the markets.
Market Opening Expectations and Recent Performance
Benchmark indices Sensex and Nifty 50 are projected to begin trading higher on Sunday, although market participants should brace for considerable volatility. This special trading session has been arranged specifically due to the budget presentation, making it a crucial day for investors.
GIFT Nifty futures concluded at 25,443 on Friday, suggesting that the Nifty 50 will likely start above its last recorded close of 25,320.65. This positive indication comes despite Friday's market performance, where both major indices closed lower as investors took profits, interrupting a three-day streak of gains.
On Friday, the Sensex fell by 296.59 points, or 0.36%, ending at 82,269.78, while the Nifty 50 decreased by 98.25 points, or 0.39%, to finish at 25,320.65. This profit-taking activity marked a pause in the recent upward momentum as traders positioned themselves ahead of the budget announcement.
Technical Analysis and Market Outlook
According to Dharmesh Shah, Vice President at ICICI Securities, equity benchmarks settled the volatile week on a positive note at 25,320, representing a 1% gain. The India-EU trade deal provided cushion to the market during this period. Mid and small cap indices recovered lost ground, settling 2% and 3% higher respectively.
Sectorally, Defense, PSU and Oil & Gas sectors remained at the forefront ahead of the Union Budget, while consumption sectors showed lackluster performance. The weekly price action formed an Inside bar candle following three consecutive weeks of lower low formation, indicating a pause in the prevailing downtrend as supportive efforts emerged near the 52-week EMA at 24,900.
Key Technical Observations
- The upcoming eventful week will see all eyes turn to the Union Budget and RBI Policy outcome, both expected to steer market sentiment and keep volatility elevated
- Strong support for the Nifty 50 is placed in the 24,700-24,300 zone
- Sustainability above last week's high of 25,400 post-Budget outcome would lead to extension of pullback rally toward the psychological mark of 26,000 in coming weeks
- Within a structural bull market, secondary correction is a common phenomenon, with the current 5.5% correction from All Time High (26,373) having absorbed pessimism around various concerns
The sentiment and momentum indicators are poised at bearish extremes, indicating an impending pullback. The percentage of stocks above 50-day SMA within the Nifty 500 Universe has bounced from a bearish extreme level of 15% to the current reading of 29%. Meanwhile, the weekly stochastic oscillator is placed in oversold territory, suggesting limited downside potential.
Sectors in Focus and Key Monitorables
Several sectors are expected to remain in focus during this budget period, including BFSI, Defense, PSU, Capital Goods, and Infrastructure. Market participants will be closely watching several key factors that could influence market direction:
- Union Budget outcome and its implications for various sectors
- RBI Policy decisions and their impact on monetary conditions
- Auto sales figures for the current period
- US Dollar Index movements, which have declined sharply over the past two weeks to two-year lows
- Brent Crude oil prices approaching nine-month resistance trend lines
Investment Recommendation
Dharmesh Shah of ICICI Securities recommends buying Larsen & Toubro Ltd (L&T) in the range of ₹3,850-3,940. He has set a price target of ₹4,520 with a stop loss of ₹3,718 for this stock. It's important to note that the Research Analyst or his relatives or ICICI Securities do not have actual/beneficial ownership of 1% or more securities of the subject company as of January 30, 2026.
Disclaimer: The views and recommendations provided in this analysis are those of individual analysts or broking companies. Investors are strongly advised to consult with certified experts before making any investment decisions, as market conditions can change rapidly and individual circumstances may vary.
