Indian markets rebounded sharply on February 02, 2026, as investor sentiment recovered from the Budget-day panic, with key indices gaining over 1% on renewed buying in infrastructure and blue-chip stocks. Optimism over positive trade signals and a focus on long-term growth over the STT hike fueled the strong recovery, signaling a partial digestion of the previous session's volatility.
Indian markets staged a strong rebound on February 02, 2026, turning bullish with significant gains in benchmark indices driven by value buying, infrastructure focus, and optimism from potential trade developments, recovering from the prior day's Budget-induced volatility. Key overarching themes included partial digestion of fiscal measures like higher borrowing and STT changes, sector rotation toward autos and infra, and mixed global cues influencing sentiment.
- Sensex and Nifty surged over 1% led by late-session buying in blue-chips.
- Infrastructure and capex stocks rallied on Budget continuity.
- STT hike concerns eased as markets focused on growth push.
- Precious metals selloff continued to pressure related sectors.
- Positive India-US trade signals boosted ADRs and sentiment.
Indian Equity Benchmarks Rebound Sharply Post-Budget Volatility Indian stock markets delivered a robust recovery with the BSE Sensex climbing 943.52 points or 1.17% to close at 81,666.46 while the NSE Nifty 50 advanced 262.95 points or 1.06% to 25,088.40. This marked a strong bounce after the sharp decline in the special Budget session on February 1. The rebound was fueled by fag-end buying in heavyweight stocks across sectors. Investors appeared to digest the Budget proposals more calmly focusing on sustained capex emphasis. Infrastructure and auto stocks led the charge reflecting positive sentiment toward government spending priorities. The intraday swing was notable with Sensex moving over 1,300 points from low to high. Broader markets also participated with midcap and smallcap indices gaining modestly. India VIX eased 8% indicating reduced fear levels compared to the previous session. Market breadth turned positive with advances outnumbering declines. This performance recouped a portion of the prior losses and restored some stability. The rupee strengthened modestly against the dollar. Overall the session highlighted resilience amid policy adjustments. Trading volumes remained elevated reflecting active participation. Analysts viewed this as a healthy correction phase post-event reaction. The close near day highs suggested building momentum for near-term trades. This rebound underscored the market's ability to adapt quickly to fiscal announcements.
Record Government Borrowing Plan Raises Fiscal Concerns The government announced a gross borrowing of Rs 17.2 trillion rupees for FY27 exceeding economist estimates and pushing bond yields higher to around 6.78%. This record figure stemmed from the need to fund elevated capital expenditure while targeting a fiscal deficit of 4.3%. Higher borrowing crowds out private sector credit potentially pressuring interest rates. Bond markets reacted negatively with yields rising on supply concerns. This development added to post-Budget caution among fixed-income investors. Analysts noted risks to duration trades in the near term. The move aims to support infrastructure but raises questions on crowding-out effects. Sovereign bond sentiment remained subdued amid the announcement. Fiscal consolidation path continues but with elevated gross numbers. Market participants monitored RBI responses closely for liquidity management. This borrowing plan influenced PSU bank and financial sector performance modestly. Overall it contributed to mixed sentiment in debt markets. The figure highlighted continued reliance on market borrowings for growth funding. Investors awaited further details on auction calendars. This news carried implications for long-term yield trajectories in India.
STT Hike on Derivatives Triggers Brokerage Sector Pressure The Union Budget introduced a sharp increase in Securities Transaction Tax on futures to 0.05% from 0.02% and on options to 0.15% from lower prior rates. This change aimed to curb excessive speculation in the F&O segment. Brokerage stocks faced immediate selling pressure as higher costs could impact trading volumes. The measure contributed to the sharp decline in the special Budget session. Retail and high-frequency traders expressed concerns over increased transaction expenses. Analysts debated the long-term effects on liquidity and price discovery. Capital market indices fell significantly in response. Some viewed it as a step toward balanced participation. The hike applied from April 1 impacting ongoing strategies. Brokerages like those in the ecosystem saw shares slide. Market experts noted marginal per-lot cost increases for many. This policy shift influenced derivatives turnover expectations. Overall it represented a regulatory tightening in trading. Sentiment in the segment remained cautious post-announcement. The change sparked discussions on retail investor behavior. It formed a key part of Budget market reactions.
Precious Metals Selloff Drags Nifty Metal Index Lower Global weakness in gold and silver led to a sharp decline in precious metals prices on MCX with significant intraday drops. Nifty Metal index shed notable ground amid the commodity rout. Hindustan Zinc and other players faced steep corrections. The crash reflected broader speculative unwinding in metals. Indian commodity-linked stocks bore the brunt of external pressures. Analysts attributed the move to shifting global risk appetite. Silver futures saw particularly heavy losses extending recent trends. This development impacted sector performance negatively. Metal stocks underperformed broader indices during the session. The selloff continued from prior days adding volatility. Investors reassessed exposure to commodity cyclicals. Overall it highlighted interconnected global-India commodity dynamics. The pressure eased somewhat by close but lingered. Sector rotation away from metals became evident. This news carried implications for inflation-hedge strategies. Market participants monitored international price recoveries closely.
Business Standard - https://www.business-standard.com/markets/news/nifty-metal-sheds-9-hind-zinc-20-in-2-days-what-should-investors-do-126020200087_1.html
Optimism Builds Around India-US Trade Deal Progress Positive signals emerged on the India-US bilateral trade agreement with tariff reductions discussed boosting sentiment. ADRs of major IT firms like Infosys and Wipro saw strong gains. GIFT Nifty reacted positively surging in evening trade. The deal promised enhanced export opportunities for Indian goods. Market participants welcomed potential tariff cuts to around 18%. This development provided a counterbalance to domestic fiscal concerns. Infrastructure and export-oriented stocks benefited indirectly. Analysts viewed it as supportive for long-term growth. The news lifted broader market optimism post-Budget. ADRs performance signaled foreign investor interest. Overall it contributed to the rebound momentum. Trade deal progress remained a key monitorable. This international linkage influenced domestic flows. Sentiment improved on cross-border cooperation prospects. The agreement highlighted strategic economic ties.
Trump Nominates Kevin Warsh as Next Fed Chair US President Trump nominated Kevin Warsh a former Fed governor as the next Federal Reserve Chair to succeed Jerome Powell. Warsh's selection raised expectations of a potentially hawkish policy tilt. Markets assessed implications for global interest rates. The nomination introduced uncertainty in monetary policy outlook. Investors monitored Senate confirmation prospects closely. Warsh's views on productivity and inflation influenced reactions. This US development carried spillover effects to emerging markets including India. Dollar strength emerged in response. Global rate trajectory discussions intensified. The pick aligned with administration priorities. Overall it added caution to international sentiment. Indian markets factored in potential Fed shifts. This news remained relevant for cross-border capital flows. Analysts awaited further policy signals under new leadership.
Strong US GDP Growth Amid Mixed Labor Signals US economy expanded at 4.4% in Q3 2025 supported by robust consumer spending. However recent jobs data showed softer additions raising momentum questions. This mixed picture influenced global risk appetite. Strong growth provided positive cues to equities. Labor market softness tempered enthusiasm. Investors watched upcoming data for confirmation. The release impacted commodity and currency markets. Overall it offered supportive macro backdrop. Emerging markets including India noted the resilience. US consumer strength remained a key driver. This data point shaped Fed expectations modestly. Cross-border implications stayed relevant. Markets digested the figures amid policy transitions.
Interactive Brokers - https://www.interactivebrokers.com/campus/traders-insight/securities/macro/economic-update-week-of-february-2-2026
Defense Sector Shows Volatility Post-Budget Allocation Budget increased defense spending focus leading to mixed stock reactions in the sector. Bharat Electronics reached record highs on positive outlook. In contrast Bharat Dynamics faced sharp declines amid reassessment. Sector volatility persisted after announcements. Investors evaluated capex benefits selectively. Overall defense theme retained long-term appeal. Some stocks benefited from order expectations. Others corrected on valuation concerns. The allocation reinforced strategic priorities. Market participation remained active in PSU defense names. This news highlighted sector-specific Budget impacts. Performance diverged within the space. Analysts monitored order book updates closely.
Business Standard - https://www.business-standard.com/markets/news/stock-market-live-february-2-nse-bse-sensex-nifty-gift-nifty-q3-results-budget-2026-stt-hike-share-market-today-126020200087_1.html
PSU Banks Underperform on Borrowing Crowding-Out Fears Nifty PSU Bank index declined notably over recent sessions with stocks like Indian Bank and Bank of Baroda dropping significantly. Higher government borrowing raised concerns over credit availability. This crowding-out fear pressured valuations. Banks faced margin and growth headwinds potentially. Sector underperformance contrasted broader recovery. Investors rotated away from financials temporarily. Overall sentiment stayed cautious in PSU space. The development tied to fiscal dynamics. Monitoring RBI liquidity actions remained key. This news influenced banking sector flows.
Business Standard - https://www.business-standard.com/markets/news/nifty-psu-bank-index-slips-8-in-2-days-indian-bank-bob-down-up-to-11-126020200087_1.html
Adani Group Stocks Gain on Infrastructure Emphasis Adani Enterprises Ports and Green Energy shares rose up to 5% amid Budget's continued capex focus on infrastructure. The allocation aligned with group strengths in ports power and related areas. Investor confidence returned in these names. Sector tailwinds supported the upmove. Overall it reflected positive corporate implications. The rally contributed to broader market gains. Adani ecosystem benefited from policy continuity. Market participation stayed strong in these counters. This development highlighted infra-linked opportunities. Analysts viewed it favorably for medium-term.
Business Standard - https://www.business-standard.com/markets/news/adani-group-stocks-in-focus-enterprises-ports-green-energy-gain-up-to-5-126020200598_1.html