Pre-Market: Markets Rebound After Budget Day; Nifty at 25,088

Indian equity markets head into Tuesday after a sharp rebound on Monday, 2nd February. The recovery came as investors reassessed the Union Budget’s longer-term signals and stepped in to buy beaten-down blue-chip stocks.

The bounce followed a steep sell-off on Sunday, when markets logged their worst Budget-day fall in six years. Monday’s session, however, suggested that some of that reaction may have been driven by short-term positioning rather than a fundamental shift in outlook.

Yesterday’s Market Recap

Both key indices closed firmly higher, recovering from oversold levels.

• The BSE Sensex rose 943.5 points, or 1.17%, to close at 81,666.46.

• The NSE Nifty 50 advanced 261 points, or 1.06%, ending the day at 25,088.40.

The gains helped offset part of Sunday’s damage, when the Sensex had fallen 1,546.84 points (1.88%) to 80,722.94, and the Nifty had dropped 495.20 points (1.96%) to 24,825.45. That earlier slide had been triggered by concerns around a proposed hike in securities transaction tax (STT) on derivatives, higher government borrowing projections, and the absence of measures aimed at attracting foreign inflows.

Key Drivers Behind Monday’s Rebound

As investors shifted their attention from the immediate tax-related issues to more general policy continuity, markets found support. Analysts observed that the budget's emphasis on manufacturing and infrastructure expenditure, as well as its dedication to fiscal restraint, helped to stabilise the mood.

Sunday’s sell-off had been driven largely by proposals to raise transaction taxes on derivatives, higher-than-expected gross borrowing for FY27, and the lack of relief on capital gains taxes. Monday’s recovery suggested that some of the reaction may have been short-term.

Stocks like Reliance Industries climbed 3.04%, emerging as the biggest contributor to gains on the Sensex and Nifty after falling sharply on Budget day. Larsen & Toubro rose 2.62%, as traders bet that continued emphasis on capital expenditure would support order inflows and earnings visibility.

Rupee Strength & Global Market Trends

A stronger rupee added to the stabilising backdrop. The Indian currency posted its best single-day gain in over a month, supported by likely central-bank dollar sales and modest inflows.

The rupee rose 0.5% to ₹91.5125 per US dollar, marking its strongest one-day move since December 19. The firmer currency helped ease some pressure from volatile global cues.

As of 2nd February 2026, major US indexes are in positive territory, with the Dow Jones near 49,220 and the S&P 500 around 6,975. Across Asia, Japan’s Nikkei 225 is around 40,998, while Hong Kong’s Hang Seng is up about 0.7%.

GIFT Nifty, NSE’s offshore Nifty 50 futures, on the other hand, is around 25,200, up by 0.27%

Technical Analysis

Technical factors contributed to Monday’s rally. Traders attempted to cover short positions as the Nifty rebounded from oversold levels and hit the 25,000 mark once again.

Conversely, the India VIX relaxed from the severe levels seen during the budget session, falling 8.21% to about 13.8.

According to Shrikant Chouhan, Head of Equity Research at Kotak Securities, favourable reversal patterns on intraday and daily charts backed the rebound when markets found support at intraday lows.

What to Expect in Today's Market?

Attention now turns to whether the recovery seen on Monday can hold as trading resumes on Tuesday. Participants are expected to track budget-related policy cues alongside moves in global markets, bond yields and the rupee.

The sharp reaction to budget day has eased, but caution has not disappeared. Investors continue to balance valuation comfort and policy continuity against patchy earnings visibility and ongoing external risks.

Sources:

ET

Moneycontrol

NSE

BSE