Indian stock market trades cautiously and is volatile after the Union Budget shock

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The Indian stock market trades in a cautious and highly volatile mood today, February 02, 2026, as investors continue to react to the Union Budget 2026–27 announced recently. Benchmark indices show mixed movement during early trade, reflecting uncertainty and reassessment of positions after sharp losses seen on the Budget session. 

Market participants remain selective, while broader sentiment stays weak due to policy-related concerns and global cues.

Sensex and Nifty Performance

At the start of the trading session, the BSE Sensex trades around the 80,550 to 80,620 range, showing marginal weakness. The NSE Nifty 50 moves near the 24,760 to 24,800 levels, struggling to gain strong upward momentum. 

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These levels come after a steep fall recorded during the special Budget trading session, where selling pressure dominated across sectors. Volatility remains elevated, and price swings are visible during intraday trades.

Impact of Union Budget 2026

The major trigger behind the current market weakness is the Union Budget 2026. The government announcement that raises Securities Transaction Tax on equity derivative trading markets causes serious investor market distress. 

The Sensex experienced a decline of 1,546 points during the Budget session, whereas the Nifty suffered a loss of 495 points. The current situation represents the worst Budget Day performance in almost six years. The sudden fall leads to panic selling in some segments, while many investors choose to stay on the sidelines and wait for clarity.

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Sector-Wise Market Movement

Market sectors show different performance results. Banking and financial stocks trade under pressure due to liquidity concerns and decreased trading activity. Investors who have turned cautious about economic growth expectations now sell capital goods and metal stocks. 

Select IT stocks demonstrate stable performance because defensive buying and currency-related advantages support their market value.

The limited strength of oil and gas stocks leads to mixed trading for FMCG stocks, which maintain high valuation levels. The market shows risk aversion patterns through the underperformance of mid-cap and small-cap stocks. Sectoral breadth maintained a negative trend throughout most of the trading session.

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Volatility and Derivatives Activity

The Budget announcement created economic instability, which led to market fluctuations. The India VIX rises, showing higher fear and uncertainty among traders. Derivatives trading activity slows down as higher STT discourages aggressive positions. Some exchange-related stocks experience sudden price declines because investors fear decreased trading activity in the future.

Intraday traders reduce exposure, while long-term investors adopt a wait-and-watch approach. Indices like Nifty show less active participation than what occurs during typical trading sessions.

Global and Macro Factors

Global markets provide mixed signals. Asian markets trade unevenly because of worries about Chinese economic data and the regional growth outlook. US market futures remain subdued, which adds to cautious sentiment in domestic equities. 

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Foreign institutional investors remain careful, and fresh inflows stay limited. Short-term market direction remains affected by currency movements and global interest rate expectations.

Market Outlook

The Indian stock market remains in a consolidation phase today, with volatility expected to stay high in the near term. Technical indicators show limited price decrease potential from present market positions, but complete recovery patterns have not yet developed. 

Market indices will move within a specific range until the new tax regulations and global market conditions are fully understood by investors.

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The current Indian stock market shows a period of market adjustment after the Budget announcement. The market will move through its next significant phase after traders show one of three reactions to upcoming policy developments.