India Budget 2026: Markets Flat in Special Sunday Session; Nifty at 25,378, Metals Slide 4.4%

Indian stock market traders are bracing for a volatile special trading session on February 1, as Finance Minister Nirmala Sitharaman presents the Union Budget 2026-27 at 11 a.m. The session is expected to see sharp intraday swings, with investors closely watching signals on government spending, taxes and sector-specific support.

Markets opened cautiously in early trade, with traders avoiding aggressive positions ahead of the budget speech. Sentiment remained muted as investors weighed whether the government would continue its focus on capital expenditure, offer relief to export-oriented companies facing higher U.S. tariffs, and stick to its existing fiscal roadmap.

Special budget-day trading session

Both the BSE and NSE are holding a special equity-only trading session to coincide with the Budget presentation in Parliament. Market participants expect volatility in benchmark indices such as the Sensex and Nifty 50 as policy details emerge and automated trading systems react to new fiscal numbers.

Brokerage commentary ahead of the session suggests that most investors are expecting policy continuity rather than major reforms. The general view is that the government may prioritise steady capital spending and targeted support for stressed sectors instead of announcing sweeping tax changes or large new subsidies.

Market levels and recent performance

In early trade, the Nifty 50 slipped slightly, while the Sensex traded flat, reflecting the cautious mood. Debt and currency markets remained shut because of the special session, keeping all risk-taking focused on equities.

Since the previous Union Budget, the Nifty 50 has gained nearly 8 per cent. However, it has underperformed several Asian and emerging market peers. Analysts attribute this to sustained foreign investor outflows and modest corporate earnings growth, which have limited further upside despite India's stable macroeconomic conditions.

The regular session on January 31 ended on a weak note, snapping a three-day rally. Both the Sensex and Nifty closed lower as traders booked profits ahead of the high-stakes budget day.

Sector trends on budget day

Sectoral performance remained mixed during the special session. Metal stocks saw sharp losses, tracking weaker global metal prices and a stronger U.S. dollar. Profit-taking after a recent rally also added pressure to the sector.

In contrast, defence-related stocks moved higher. Traders appeared to be positioning for a possible increase in defence allocations in the Union Budget, in line with the government's push to boost domestic manufacturing and reduce import dependence.

Broader markets underperformed large-cap stocks, signalling risk aversion. Mid-cap and small-cap indices declined, as traders preferred the relative safety and liquidity of blue-chip stocks until there was clarity on budget measures.

Global cues weigh on sentiment

Overseas markets added to caution. U.S. stocks ended lower after President Donald Trump nominated Kevin Warsh as the next Chairman of the U.S. Federal Reserve, a move seen as pointing towards a tighter stance on inflation and interest rates. The development strengthened the U.S. dollar and pressured global risk assets.

A brief U.S. government shutdown and ongoing concerns over global interest rates further weighed on sentiment. The stronger dollar also hurt commodities and influenced foreign investor flows into emerging markets like India.

Commodities, currencies and crypto

Gold and silver prices fell sharply as traders booked profits amid a stronger dollar and a risk-off mood. Crude oil prices edged lower, offering some relief for India's import bill.

Cryptocurrencies mirrored the weak global sentiment, with Bitcoin slipping below the USD 80,000 mark and other major tokens seeing sharp declines amid thin liquidity.

What traders are watching

For the derivatives segment, Sammaan Capital remains on the F&O ban list, limiting trading activity in the stock. Market participants are therefore focusing on benchmark indices, defence stocks, export-oriented companies and rate-sensitive sectors as the Budget details unfold.

Overall, traders enter Budget Day with mixed signals: cautious domestic markets, sector-specific volatility, supportive defence themes and uncertain global cues. The direction of the Indian stock market through the session will largely depend on how investors interpret Nirmala Sitharaman's Union Budget 2026-27 and its implications for growth, spending and fiscal discipline.

This article is for information purposes only and should not be treated as investment advice.