Indian benchmark indices are likely to open on a muted note on Monday after a sharp rout on Sunday as the Union Budget proposed hiking the securities transaction tax on derivatives and offered no major measures to attract foreign investment. Finance Minister Nirmala Sitharaman pitched the budget as a renewed push for manufacturing-led growth amid a volatile global backdrop.
Nifty futures on the NSE International Exchange traded 10 points, or 0.04 per cent, up at 24,863.50, hinting at a flat start for the domestic market on Monday. Asian share markets mostly followed Wall Street futures lower on Monday. KOSPI and Hang Seng were seen sharply lower, while Nikkei inched higher.
The Indian rupee and government bonds are expected to extend their rough patch this week as the government’s higher-than-expected borrowing plan is a concern for traders while weak capital flows leave the currency exposed. The rupee fell to a record low of 91.9875 per dollar on Friday, ending just shy of the 92 mark, falling more than 2 per cent in January.
In commodity markets, volatility was the main theme as gold fell 1.4 per cent to $4,807 an ounce , having shed almost 10 per cent on Friday. After an early dive, silver steadied at $84.62 but trade was extremely choppy.
For equity markets, the Budget is structurally positive, offering improved earnings visibility through infrastructure-led growth and policy certainty, said Ajit Mishra, SVP of Research at Religare Broking. “While tax measures on derivatives may trigger near-term volatility, the broader policy framework enhances India’s long-term investment attractiveness, anchored in stability, reform momentum and sustainable growth.”
Oil prices fell as investors waited anxiously to see whether the US would strike Iran, or some sort of deal could be struck. Brent slid 2.7 per cent to $67.46 a barrel, while U.S. crude dropped 2.8 per cent to $63.38 per barrel.
Provisional data available with NSE suggest that FPIs turned net sellers of domestic stocks to the tune of Rs 588.34 crore on Sunday. On the other hand, domestic institutional investors (DIIs) turned sellers of Indian equities to the tune of Rs 682.73 crore on a net-net basis.
Budget impact on markets
Bhuvaneshwari A, MD & CEO at SBICAP Securities said that the Union Budget strikes a strong balance between growth and macro-economic stability. The sustained push on capex-led growth across various sunrise sectors such as semiconductors, data centres, critical minerals, electronics, biopharma, infrastructure, shipping and railways strengthens the foundation for long-term capital formation.
“The calibrated increase in STT on futures and options seeks to curb excessive speculation while encouraging healthier cash market participation, while we await market reaction to this development. With GDP growth projected at 10 per cent, the Budget reinforces India’s position as a compelling destination for long-term investment and capital market growth,” she said.
This Budget has many positive structural elements and reflects a long term growth mindset. The strong push on infrastructure, domestic manufacturing and the technology ecosystem can meaningfully strengthen India’s industrial and innovation base, said Bhupinder Singh, Founder at InCred Group.
“At the same time, the sharp increase in STT on futures and options has understandably unsettled markets and could weigh on trading volumes at a delicate moment. Predictability and active participation are vital for deep capital markets, so ongoing engagement between government and market stakeholders will be key,” he said.
Nifty50 and Sensex outlook
The short-term market texture is volatile, and volatility is likely to continue in the near future. Hence, level-based trading would be the ideal strategy for day traders. On the higher side, 25,000/81,300 would act as a crucial resistance zone. As long as the market is trading below this level, weak sentiment may prevail, said Shrikant Chouhan, Head Equity Research at Kotak Securities.
“On the downside, the correction wave is likely to continue till 24,650-24,600/80,100-79,900. Further down side may also continue which could drag the index till 24,500-24,300/79,600-79,000. On the flip side, above 25,000/81,300, the market could move up to 25,200/81,900 or 200-day SMA,” he adds.
\The sharp weakness got triggered and Nifty was not able to show any sustainable recovery till the end. A long bear candle was formed on the daily chart with lower shadow. Technically, this market action indicates a decisive break down of the crucial support at 25,000 levels. This is not a good sign, said Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities.
“The negative chart pattern like lower tops and bottoms is intact on the daily chart and present weakness could be in line with the formation of new lower bottom, which needs to be confirmed. The next lower supports to be watched at 24,500-24,400 and immediate resistance is placed around 24,900-25,000 levels,” he said.
Nifty Bank outlook
The zone of 57,800–57,700 is expected to offer immediate support for Nifty Bank. A sustained move below 57,700 may intensify the downside and pave the way for further correction toward 57,200, followed by 56,500 in the short term, said Sudeep Shah, Head of Technical and Derivatives Research at SBI Securities. The 50 day EMA zone of 59,000–59,100 will act as a crucial resistance area.
The immediate support for Nifty Bank zone is placed at 58,000–58,250, which also coincides with the 100-day EMA and acts as a crucial cushion. On the upside, 58,900–59,000 has now emerged as a major supply area and near-term resistance. Momentum has weakened, with MACD turning negative, reinforcing the bearish bias, said Ponmudi R, CEO at Enrich Money.
“The near-term tone remains bearish, with a sell-on-rallies approach preferred near the 58,900–59,000 resistance zone. Any meaningful recovery would require a strong close above 59,000 accompanied by healthy volumes to shift momentum. Failing that, the risk of further downside extension remains elevated,” he said.
Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.
