Tue Feb 03 03:50:00 UTC 2026: # Nifty 50 Rebounds After Budget Announcement, But Underlying Market Weakness Persists
The Story:
On February 2, 2026, India’s Nifty 50 index increased by 1% to 25,088 points, and the BSE Sensex rose by 1.2% to 81,666.46 points, following a significant market dip triggered by the Budget announcement increasing securities transactions tax. The market rebound followed an almost 2% slip the previous day. While most sectoral indices gained, Nifty IT and healthcare faced declines. However, underlying market weakness continues, with fewer stocks driving the gains and the advance/decline ratio decreasing for three consecutive months.
Key Points:
* Nifty 50 increased by 1% to close at 25,088 points.
* BSE Sensex rose by 1.2% to 81,666.46 points.
* The market increase followed a 2% dip on Budget day.
* Nifty IT and healthcare were the only sectoral indices to decline.
* The advance/decline ratio has been decreasing for three consecutive months, indicating underlying market weakness.
* Motilal Oswal Financial Services noted that the late-session rally came as investors analysed the fine print of Budget 2026
Critical Analysis:
The bounce back on February 2nd could be attributed to investors beginning to digest the contents of the budget, combined with positive sentiment from the potential India-US Trade Deal that was being finalized around the same period.
Key Takeaways:
* The market reacted negatively to the initial Budget announcement but showed signs of recovery as investors reassessed the fine print.
* Despite the rebound, underlying market weakness persists, suggesting that the gains are concentrated in a few stocks.
* India-US trade deals are critical to market growth.
Impact Analysis:
The continued underlying market weakness, as indicated by the decreasing advance/decline ratio, presents a cause for concern. It suggests that market growth may be unsustainable if only a small number of stocks are driving the gains. Investors should exercise caution and carefully analyze the individual performance of stocks before making investment decisions. The India-US trade deals are a long-term investment and can create new opportunities for growth.
First Piper 