Tue Feb 03 03:50:00 UTC 2026: ### Indian Markets Rebound Slightly After Budget Day Selloff, Amidst Global Uncertainty

The Story:

Indian equity markets showed signs of recovery on Monday morning, following a selloff on Budget Day. The Sensex and Nifty indices posted gains, though mid-cap and small-cap indices experienced losses. Sectoral performance was mixed, with metal, realty, and oil & gas sectors performing well, while consumer durables and IT sectors lagged. The rebound occurred despite negative global cues, as Asian-Pacific markets experienced significant losses, and US markets also closed in the red in the previous session. Analysts attribute the Budget Day selloff to a knee-jerk reaction to the increase in Securities Transaction Tax (STT) on F&O trades, alongside some unrealistic expectations regarding Long Term Capital Gains (LTCG) tax changes.

Key Points:

  • Sensex gained 373 points (0.46%) to reach 81,096.
  • Nifty gained 87 points (0.35%) to settle at 24,913.
  • Nifty Midcap 100 declined 0.50%, and Nifty Smallcap 100 lost 0.85%.
  • Metal, realty, and oil & gas sectors traded in the green.
  • Nifty consumer durables and IT sectors were major losers, down 1% and 0.61%, respectively.
  • Analysts believe the Budget Day selloff was a reaction to the increased STT on F&O trades.
  • Foreign Institutional Investors (FIIs) net sold equities worth Rs 588 crore on February 1st, while Domestic Institutional Investors (DIIs) were net sellers of equities worth Rs 683 crore.
  • Asian-Pacific markets experienced significant losses, with China’s Shanghai index easing 1.32%, Shenzhen losing 1.41%, Japan’s Nikkei declining 0.52%, and Hong Kong’s Hang Seng Index losing 2.15%.

Critical Analysis:

The timing of this marginal recovery warrants some consideration. Given that February 3rd saw potentially market altering news regarding US and India trade deals, it is possible that the “positive start” to the trading week anticipated on February 2nd (per the provided context “Trade setup for Feb 2: GIFT NIFTY suggests a positive start on Monday, will it sustain?”) was slightly delayed and mitigated by global headwinds.

Key Takeaways:

  • Indian markets are exhibiting resilience, showing potential for recovery despite a negative global environment.
  • Government policy changes, such as the STT increase, can have immediate and significant impacts on market sentiment.
  • Sectoral performance varies widely, highlighting the importance of diversification for investors.
  • FII and DII activity can influence market direction, but their impact can be offset by other factors.
  • Global economic conditions and international market performance continue to exert influence on Indian markets.

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