Sensex, Nifty turn flat; what lies ahead for markets after Budget?
The previous special trading session saw the steepest Budget-day decline in six years, as investors reacted to the increased cost of derivatives trading. Broader indices continued to remain under pressure.
- Feb 2, 2026,
- Updated Feb 2, 2026 10:36 AM IST
Indian equity benchmarks were trading on a flat note in Monday's trade after a sharp selloff triggered by the Union Budget's announcement of a higher Securities Transaction Tax (STT) on futures and options (F&O).
The previous special trading session saw the steepest Budget-day decline in six years, as investors reacted to the increased cost of derivatives trading. Broader indices continued to remain under pressure.
The Budget 2026-27 has drawn mixed reactions from market participants.
Venkatesh Balasubramaniam, MD & Head of Research, JM Financial Institutional Securities, said, "Budget FY27 strikes a careful balance between growth support and fiscal discipline. It reinforces macroeconomic stability through a credible path of fiscal consolidation while sustaining a strong public capex push focused on infrastructure, manufacturing and defence. This makes the Budget clearly positive for the economy, as it strengthens medium-term growth drivers, supports domestic manufacturing and enhances India's competitiveness in services such as IT and digital infrastructure. However, the market impact is mixed. Higher government borrowings and an increase in derivatives transaction taxes could weigh on bond yields, banks, NBFCs and market-linked businesses in the near term. While measures like buyback tax rationalisation provide some relief, the Budget prioritises long-term economic strength over short-term market sentiment."
Some market experts expect near-term volatility as participants recalibrate their positions.
Ravi Singh, Chief Research Officer at Mastertrust, said, "Markets are likely to stay volatile in the near term as investors adjust to higher costs and reassess trading strategies after the announcement of a higher Securities Transaction Tax (STT) on derivatives."
At the same time, selective buying may emerge after the recent correction. Kranthi Bathini, Equity Strategist at WealthMills Securities, said, "Markets may remain volatile in the near term. However, some bottom fishing is expected at lower levels."
Indian equity benchmarks were trading on a flat note in Monday's trade after a sharp selloff triggered by the Union Budget's announcement of a higher Securities Transaction Tax (STT) on futures and options (F&O).
The previous special trading session saw the steepest Budget-day decline in six years, as investors reacted to the increased cost of derivatives trading. Broader indices continued to remain under pressure.
The Budget 2026-27 has drawn mixed reactions from market participants.
Venkatesh Balasubramaniam, MD & Head of Research, JM Financial Institutional Securities, said, "Budget FY27 strikes a careful balance between growth support and fiscal discipline. It reinforces macroeconomic stability through a credible path of fiscal consolidation while sustaining a strong public capex push focused on infrastructure, manufacturing and defence. This makes the Budget clearly positive for the economy, as it strengthens medium-term growth drivers, supports domestic manufacturing and enhances India's competitiveness in services such as IT and digital infrastructure. However, the market impact is mixed. Higher government borrowings and an increase in derivatives transaction taxes could weigh on bond yields, banks, NBFCs and market-linked businesses in the near term. While measures like buyback tax rationalisation provide some relief, the Budget prioritises long-term economic strength over short-term market sentiment."
Some market experts expect near-term volatility as participants recalibrate their positions.
Ravi Singh, Chief Research Officer at Mastertrust, said, "Markets are likely to stay volatile in the near term as investors adjust to higher costs and reassess trading strategies after the announcement of a higher Securities Transaction Tax (STT) on derivatives."
At the same time, selective buying may emerge after the recent correction. Kranthi Bathini, Equity Strategist at WealthMills Securities, said, "Markets may remain volatile in the near term. However, some bottom fishing is expected at lower levels."