Tue Feb 03 03:50:00 UTC 2026: # Sensex and Nifty Rebound After Budget Day Plunge

The Story:
Indian stock market benchmark indices, Sensex and Nifty, rebounded in early trade on Monday, February 2, 2026, following a significant drop on Budget day. Value-buying in blue-chip firms drove the recovery. The market had reacted negatively to Finance Minister Nirmala Sitharaman’s budget, particularly a hike in securities transaction tax on equity derivatives, despite the budget’s focus on long-term growth and infrastructure.

Key Points:

  • Sensex climbed 302 points to 81,024.94 in early trade.
  • Nifty rose by 59.25 points to 24,884.70.
  • Adani Ports, Larsen & Toubro, Asian Paints, Bharat Electronics, Eternal, Reliance Industries, Power Grid and HDFC Bank were among the major gainers.
  • Trent, Titan, ITC and Hindustan Unilever were among the laggards.
  • Finance Minister unveiled a ₹53.5 lakh crore Union Budget for 2026-27 on Sunday, February 1, 2026.
  • The Budget included measures to boost manufacturing, offer long-term tax incentives for global data centres, and support agriculture and tourism.
  • A hike in securities transaction tax on equity derivatives led to a market plunge of as much as 2% on Budget day.
  • Foreign institutional investors offloaded equities worth ₹588.34 crore on Sunday, February 1, 2026.
  • Asian markets, including South Korea, Japan, Shanghai, and Hong Kong, were also trading lower.
  • Brent crude tanked 4.14% to $66.45 per barrel.

Critical Analysis:
The market’s initial negative reaction to the budget, specifically the tax hike on equity derivatives, suggests investor concern about short-term profitability being sacrificed for long-term growth. The subsequent rebound indicates a re-evaluation, with value-buying suggesting confidence in the underlying strength of blue-chip companies and the long-term vision of the budget. The global market trends, including the drop in US markets and other Asian markets, likely amplified the initial negative sentiment. The mention of elections in key states explains the focus on fiscal consolidation rather than populist measures.

Key Takeaways:

  • Market reactions to budgets are often volatile and influenced by short-term factors like tax changes.
  • Value-buying can signal underlying confidence in fundamentally strong companies, even after market corrections.
  • Global market trends significantly influence Indian market sentiment.
  • Government’s focus on fiscal consolidation is a key factor.
  • The recent India-US trade deal is likely related to the recovery of stock markets

Impact Analysis:

The long-term impact of the 2026-27 Union Budget remains to be seen, but its focus on manufacturing, infrastructure, and long-term tax incentives suggests a strategic effort to attract investment and sustain economic growth. The market’s ability to rebound after the initial shock suggests resilience and a potential for sustained growth if the budget’s measures prove effective. The emphasis on fiscal consolidation indicates a commitment to long-term financial stability, which could positively influence investor confidence over time. The India-US trade deal, mentioned in the context, is set to boost the market even further.

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