Sensex, Nifty jump 1% each as market rebounds from sharp Budget-day fall: Here's why

Indian equity benchmarks staged a strong rebound in Monday's session after a sharp fall in the previous special trading session following the presentation of the Union Budget 2026–27.

Both BSE Sensex and NSE Nifty advanced around 1 per cent each. The positive momentum was also visible in the broader market, with mid-cap and small-cap indices trading higher, gaining 0.96 per cent and 0.64 per cent, respectively.

The upmove added around Rs 4.6 lakh crore to BSE market capitalisation (m-cap). Buying interest in select heavyweight stocks such as Reliance Industries Ltd (RIL), ICICI Bank Ltd, Larsen & Toubro Ltd (L&T) and HDFC Bank Ltd helped push the indices higher.

Commenting on the recovery, market veteran Arun Kejriwal said, "STT hike spooked the market yesterday. Now investors are pricing in other elements of the Budget. Yesterday was all about STT dominating the market; today, aside from STT, things are largely back to near normal. There have been ongoing efforts to advance the economy during these challenging times. Looking ahead, it's reasonable to expect the stock market to reward companies that report strong results, while underperformers will continue to feel the pressure."

During her Budget speech, Finance Minister Nirmala Sitharaman announced an increase in the Securities Transaction Tax (STT). "The sharp hike in STT -- with futures STT raised from 0.02 per cent to 0.05 per cent and options premium and exercise STT increased to 0.15 per cent -- materially raises trading costs for participants in the derivatives segment," said Aakash Shah, Technical Research Analyst at Choice Equity Broking.

Meanwhile, Kranthi Bathini, Equity Strategist at WealthMills Securities, said, "The market is witnessing some short-covering. Investors are likely engaging in bottom fishing around the 25,000 level in the medium to short term."