Sensex, Nifty Rebound After Budget-Day Selloff

On 2 February 2026, major stock market indices gained ground after experiencing significant declines on the previous day, 1 February 2026. The Sensex advanced 1.17% to close at 81,666.46 while the Nifty 50 gained 1.06% to 25,088.4. The rupee also firmed, rising 0.51% to 91.51 against the US dollar.

Today’s Market Recap

Previously, there was selling pressure on the stock market due to lower-than-expected production levels of many commodities; however, today, the volume of stocks purchased is much greater than the volume sold. Overall, since both major indices gained ground today, it is reasonable to expect further upward movement tomorrow.

Why Did the Market Rebound Today?

Bargain Buying After Budget Fear

Fear of the Budget has caused the markets to sell off sharply on Budget Day, with worries surrounding the fiscal outlook and macroeconomic indicators. The sell off created a buying opportunity for investors, particularly in the large-cap segment that are fundamentally sound, on 2 February.

Positive Global Cues

Global Markets have shown some signs of stabilisation in the aftermath of recent volatility, particularly for the UK & US as well as for Asian Indices. Global Markets have provided a lift to risk appetite in the Indian Equity market, again particularly in export sectors such as IT.

FII Flow Patterns

FII Buying Interest has remained supportive recently after heavy selling from FIIs in the last few sessions. Although overall FIIs remain cautious with flows, there has been some buying interest on dip days, showing signs of being supportive in relieving some of the near-term downward pressure.

What Does This Mean For Investors?

After a bout of budget-related selling, today’s rebound suggests that markets are looking past headline weakness, at least temporarily.

Key observations:

• Broader participation: Improving the advance-decline ratio indicates buying interest beyond just a few large caps.

• Sector rotation: Money flowed into IT, banks and defensive stocks, while cyclical themes saw some profit-booking.

However, the rebound is not yet a decisive trend change. With markets still digesting the Budget and upcoming earnings, investors may use the current pause in momentum to reassess positioning and risk exposure.

What Investors Can Do Before Markets Reopen

Based upon the mixed signals and the aftermath of the Budget, investors should consider the following:

• Monitor FII and DII Flows: Keep an eye on whether there is continued selling pressure from foreigners or if they will switch to buying, this could help indicate investor sentiment moving forward.

• Observe Global Market Trends: Global equity performance and changes in commodities prices (especially Crude Oil/Bonds) could likely play a part in how the Indian equity market moves when it resumes trading.

• Focus on Earnings: Earnings should likely dictate how individual stocks move, rather than the overall market, in the near term.

• Prefer Quality Large-Caps Over Leverage: If volatility continues in the market, you may want to maintain a long-term growth focus to minimise risk by selecting quality names with strong balance sheets to invest in; avoid using leverage until the market corrects itself going forward.

• Use Corrections Prudently: While corrections can be buying opportunities for long-term investors, invest systematically rather than in lump sums.

The immediate question is: Will the bounce back on 2 February mark the start of the next recovery phase, or will Budget concerns return when the markets reopen tomorrow?

Sources:

The Hindu

Financial Express

Hindustan Times

The Hindu Business Line