Indian Stock Market Plunges in Special Sunday Trading Session
The Indian stock market experienced a dramatic intraday sell-off during a special trading session on Sunday, February 1, 2026, following Finance Minister Nirmala Sitharaman's presentation of the Union Budget for the financial year 2026-27. The budget, which marked her ninth consecutive budget presentation, outlined measures aimed at boosting economic growth while maintaining fiscal discipline.
Market Reaction to Budget Announcements
The benchmark indices witnessed significant declines with the Sensex plunging over 2,800 points from the day's peak, while the Nifty 50 slid to 24,571.75. Market analysts attributed the sharp decline primarily to the announcement of an increase in the Securities Transaction Tax (STT) for futures trading, which triggered a knee-jerk negative response from investors.
Vinod Nair, Head of Research at Geojit Investments Limited, commented on the market reaction: "The budget supports sectors affected by global trade tariffs and focuses on emerging development areas including data centers, GCC, semiconductors, biopharma, rare earth elements, and manufacturing. Additionally, it extends support to traditional sectors like textiles, aquaculture, and MSMEs, which have been impacted by global protectionist trade policies. Despite these measures, the market's reaction has been negative, primarily due to low expectations, limited outlays, and the negative bias created by the increased Securities Transaction Tax for futures."
Market Outlook and Expert Analysis
According to Jashan Arora, Director at Master Trust Group, markets are likely to remain volatile and largely range-bound in the near term as higher transaction costs weigh on investor sentiment, particularly in the derivatives segment.
"The increase in STT and F&O-related costs could dampen trading volumes, putting near-term pressure on brokerages and exchanges that are heavily dependent on market activity. This may also lead to more cautious participation from retail traders, adding to short-term uncertainty," Arora explained.
He added: "The broader macro picture remains supportive. The Budget strikes a careful balance between growth and fiscal discipline, reinforcing the government's commitment to capital expenditure without compromising on consolidation. This is constructive for the medium-term outlook, especially for banks and infrastructure companies."
Top Five Market Triggers for the Coming Week
1. Union Budget 2026 Impact
The Union Budget for 2026-27 presented on February 1 will remain the primary market focus, with investors closely tracking fiscal discipline, capital expenditure priorities, and growth-oriented policy measures. Market experts believe the budget's emphasis on fiscal prudence while supporting key sectors will continue to influence trading patterns.
2. RBI Monetary Policy Committee Meeting
The Reserve Bank of India's Monetary Policy Committee will hold its upcoming meeting between February 4 and February 6, 2026. Market experts anticipate the central bank will maintain interest rates steady in this meeting.
Seema Srivastava, Senior Research Analyst at SMC Global Securities, noted: "For the Reserve Bank of India, which has already lowered the repo rate by 125 basis points since February 2025 to 5.25%, the Federal Reserve's pause makes it less likely that the RBI will announce another cut in its upcoming February policy meeting."
Market participants will closely monitor the RBI's decision on February 6, as it represents a key driving factor for market direction in the coming week.
3. Q3 Earnings Season Continues
As the earnings season enters its fourth week, several prominent companies are scheduled to report their financial results for the quarter ending December 31, 2025. Major companies including Adani Enterprises, Bharti Airtel, Life Insurance Corporation of India (LIC), RVNL, and State Bank of India (SBI) will declare their Q3 2026 earnings in the coming week.
Ajit Mishra of Religare Broking observed: "A busy earnings calendar across sectors is likely to add to stock-specific volatility in the market."
4. Precious Metals Decline
Gold and silver prices on the Multi Commodity Exchange of India continued to decline during the special Sunday trading session held in view of Budget 2026. MCX gold April futures opened 0.48% lower at ₹1,51,610 per 10 grams, compared with the previous close of ₹1,52,345. Selling pressure intensified thereafter, dragging gold prices down by over 9%.
Similarly, MCX silver March futures fell sharply, opening lower by ₹7,099, or 2.43%, at ₹2,84,826 per kilogram versus the earlier close of ₹2,91,925. The sell-off gathered momentum, with silver prices also sliding more than 9% during the session.
5. Foreign Institutional Investor Activity
Foreign institutional investors turned net sellers in Indian equities on January 29, offloading shares worth ₹394 crore according to provisional exchange data. In contrast, domestic institutional investors were net buyers, purchasing shares worth ₹2,634 crore during the same session.
Detailed data shows DIIs bought equities worth ₹24,424 crore and sold ₹21,785 crore during the session. Meanwhile, FIIs purchased shares valued at ₹20,213 crore but sold holdings worth ₹20,607 crore.
Year-to-date figures reveal FIIs have remained net sellers to the tune of ₹43,682 crore, while DIIs have invested ₹69,816 crore in the market, highlighting the divergent investment patterns between domestic and foreign investors.
Technical Outlook for Key Indices
Nifty 50 Analysis
According to technical analysts, the broader technical view on the Nifty remains unchanged despite the recent volatility. Ajit Mishra noted: "Sustained trading above the 25,350 level could pave the way for a further rebound towards the 25,600 zone. Conversely, a decisive break below the long-term moving average, the 200-DEMA near 25,150, may disrupt the recovery and drag the index towards the 24,750–24,900 support band."
Bank Nifty Performance
Bank Nifty closed the week at 59,610, maintaining a constructive bias and helping the benchmark defend key support levels. Mishra added: "On the upside, a decisive move above 60,300 could open the door for a rally towards the 61,000+ zone, while the 58,100–58,700 range is likely to act as a cushion during any profit-taking or corrective move."
Disclaimer: This analysis is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies. Investors are advised to consult with certified experts before making any investment decisions.
