Indian Equity Markets Exhibit Minimal Movement Following Budget-Induced Volatility
India's benchmark stock indices demonstrated negligible movement during Tuesday's trading session, as market participants continued to digest the implications of the federal budget presented on Sunday. The subdued activity followed significant market turbulence in the previous session, triggered by the government's proposal to increase transaction taxes on derivatives and the absence of substantial measures to boost foreign investment inflows.
Index Performance and Trading Patterns
The Nifty 50 index registered a marginal increase of 0.36%, closing at 24,908.25 points, while the BSE Sensex gained 0.43% to reach 81,155.50 points as of 12:15 Indian Standard Time. Throughout the trading session, both indices oscillated within a narrow band, fluctuating between losses of 0.2% and gains of 0.3%. This restrained movement contrasted sharply with Sunday's dramatic decline, when both indices plummeted nearly 2%, reaching four-month lows and recording their most substantial budget-day percentage drop in six years.
Market Sentiment and Broader Economic Factors
Market sentiment remained fragile following the government's announcement of a higher gross borrowing target, which subsequently led to increased bond yields on Monday. It is noteworthy that bond and currency markets remained closed on Sunday, potentially amplifying the equity market's reaction. The combination of fiscal concerns and specific policy measures created an environment of caution among investors, contributing to the day's limited trading range.
Technical Analysis and Market Outlook
Vinay Rajani, Senior Technical and Derivative Analyst at HDFC Securities, provided detailed insights into the Nifty 50's technical position:
During the special budget session, the Nifty 50 experienced a substantial decline of 495 points, equivalent to 1.96%, closing at 24,825. This represents the most significant percentage drop for the index since April 7, 2025. The index maintained strength until the commencement of the finance minister's budget speech but reversed course dramatically after 11:00 AM, plummeting 869 points from its peak within a ninety-minute window between 11:10 AM and 12:35 PM.
The Nifty 50 attempted a mid-session recovery, gaining 577 points to reach 25,148, but failed to sustain these higher levels, subsequently relinquishing over 400 points of that recovery. Technically, the index has broken below its consolidation range of 24,900-25,450 and has fallen beneath both its 200-day Simple Moving Average and Exponential Moving Average, suggesting a potential resumption of the positional downtrend.
Key support levels for the Nifty 50 are identified at:
- 24,571 (Budget Day Low)
- 24,337 (Swing Low)
- 24,060 (50% Retracement of the upward movement from 21,743 to 26,373)
The 25,000-25,150 range is expected to provide resistance in the short term. Market analysts advise traders to exercise caution until the Nifty 50 convincingly surpasses the 25,150 level.
Specific Trading Recommendations
Two stocks identified for potential near-term selling include:
- Aditya Birla Capital Ltd February Futures: Recommended selling at ₹322 with a target of ₹310 and stop-loss at ₹335. The stock price has breached crucial support levels at its 20 and 50-day Exponential Moving Averages with substantial volume. Additionally, it has broken down from a consolidation pattern, while the weekly Relative Strength Index has exited the overbought zone, confirming a downward reversal.
- Angel One February Futures: Suggested selling at ₹2,310 with a target of ₹2,200 and stop-loss at ₹2,355. The stock price has violated previous swing low support on daily charts, and the broader capital market index has broken its consolidation pattern. The stock is trading below both its 20 and 50-day Exponential Moving Averages, with technical indicators and oscillators turning bearish on short-term charts.
Disclaimer: The views and recommendations presented in this analysis represent individual analyst perspectives and do not reflect institutional positions. Investors are strongly advised to consult certified financial experts before making any investment decisions.
