Indian stock markets entered January 31, 2025, with cautious optimism as investors eagerly anticipated the Union Budget 2025-26, to be unveiled by Finance Minister Nirmala Sitharaman.
On the morning of January 31, the benchmark BSE Sensex opened higher, climbing by 184 points, or 0.24 percent, to touch 76,935, demonstrating resilience amid fluctuated market conditions. Meanwhile, the NSE Nifty 50 gained 74 points, or 0.32 percent, trading at 23,323. This trend followed previous gains through the week, as the markets enjoyed a three-day rally.
Key gainers included diverse sectors, with companies like Larsen & Toubro, Titan, and Maruti Suzuki India contributing to the positive momentum. The Nifty 50 index saw significant movements across its constituents, with some stocks, such as Bharti Airtel and HDFC Bank, dragging the index downward.
Market analysts pointed to the heightened anticipation for the Union Budget, noting sectors such as railways, infrastructure, fertilizers, textiles, and electric vehicles (EVs) as potential focal points for growth-oriented initiatives. Akshay Chinchalkar, Head of Research at Axis Securities, highlighted the importance of the Budget’s outcome, stating, "There was a slump post-noon, but recovery came in the final hour. Notably, December’s closing was at 23,644. If the index doesn’t close above this level today, it will mark the first four-month consecutive decline since September 2001."
Despite the positive sentiment, Foreign Institutional Investors (FIIs) had been net sellers, offloading equities worth ₹4,582.95 crore on January 30. Conversely, Domestic Institutional Investors (DIIs) purchased stocks worth ₹2,165.89 crore, indicating mixed trading behaviors among domestic and foreign investors.
Today's session is particularly interesting considering historical performance on previous Budget Days. Traditionally, the market has been characterized by volatility around this time, reflecting investor expectations versus actual outcomes from the government’s policies. Over the last three Budget announcements made by Sitharaman, the Nifty has experienced both substantial gains and significant drops, demonstrating erratic market behavior.
Commenting on the potential impact of the upcoming Budget, V K Vijayakumar of Geojit Financial Services noted, "The Budget – expectations and actuals – will influence the market today and tomorrow. Since we are going to the Budget without a pre-Budget rally, the probability of rally post-Budget will be high if the Budget delivers on growth-stimulating initiatives like cuts in personal income tax."
He elaborated on the sentiment moving forward, emphasizing, "It is important to understand the impact of the Budget will last only for a few days, at best. The medium- to long-term market trend will be dictated by GDP and earnings growth. Therefore, investors should look for cues on these macro trends."
Several analysts have laid out key levels to watch for support and resistance as markets react to new economic signals. Hardik Matalia from Choice Broking mentioned, "Nifty can find support at 23,200 followed by 23,050 and 22,950. On the higher side, 23,300 can be immediate resistance, followed by 23,400 and 23,500."
The broader market highlighted gains on the Midcap and Smallcap indices, with both indices seeing upwards movements of about 0.31 and 0.30 percent, respectively, reinforcing the optimism around the Budget announcements.
On the global stage, mixed performances echoed through Asian markets, where concerns about upcoming tariffs and economic slowing weighed on investor sentiment. Despite these external pressures, Indian markets seem ready to carve their path forward based on domestic fiscal policies.
Looking ahead, analysts expect potential volatility as the Union Budget presentation closes in, urging investors to remain vigilant and ready to adapt to new economic narratives and indicators. The upcoming announcements will likely set the tone for market direction, dependent on the government's commitment to growth-driven reforms.
Overall, as the excitement builds for the Union Budget, the stock market activity reflects the heightened sense of anticipation, illustrating how fiscal policies could steer the nation’s economic future.