Sensex Rebounds Sharply, Nifty Near 25,100: Has the Market Moved Past the Budget Shock?
| Index | Price | Change | % Chg |
| Nifty 50 | 25,088.40 | 262.95 | +1.06% |
| Nifty Bank | 58,619.00 | 201.80 | +0.35% |
| Nifty Financial | 26,799.00 | 99.90 | +0.37% |
| BSE SENSEX | 81,666.46 | 943.52 | +1.17% |
Indian equity markets staged a strong comeback after the sharp sell-off seen during the special Budget trading session, with benchmark indices recouping a meaningful portion of their losses. The rebound signalled that investors may be shifting focus from immediate tax-related concerns toward longer-term growth signals in the Union Budget.
On February 2, the BSE Sensex settled higher at 81,666.46, rising about 1.17 percent, while the Nifty 50 closed near the 25,100 mark at 25,088.40, up 1.06 percent. The recovery came after Sunday’s nearly 2 percent fall triggered by the proposed hike in securities transaction tax on derivatives and concerns around higher government borrowing.
Monday’s session showed that while policy changes can spark knee-jerk reactions, value-oriented investors often step in once prices correct.
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Value Buying in Blue Chips Helps Indices Recover Lost Ground
The day’s rally was led by strong buying in large-cap stocks across oil & gas, banking, auto and infrastructure. After opening weak due to lingering Budget sentiment, markets gradually moved into positive territory as investors picked quality stocks at lower valuations.
Heavyweights like Reliance Industries rebounded strongly, jumping over 3 percent after the previous session’s decline. Larsen & Toubro surged on optimism around continued capital expenditure and infrastructure push in the Budget.
Navy Vijay Ramavat of Indira Securities said,
“Once the initial shock passed after the Budget, markets recovered quickly, showing the sell-off was driven more by sentiment than fundamentals.”
This indicates that many investors viewed the correction as an opportunity rather than a warning sign.
Top Gainers and Losers: Which Stocks Drove the Market Move
Monday’s rebound was led by strong buying in select large-cap and defensive names, while a few financial and pharma stocks saw profit booking.
Top Gaining Stocks
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Power Grid Corporation of India — up 7.42%
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Tata Motors (Passenger Vehicles) — up 5.61%
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Adani Ports and Special Economic Zone — up 4.28%
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Bharat Electronics — up 3.63%
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Tata Consumer Products — up 3.11%
Strong interest in infrastructure, defence and consumption-linked stocks supported these gains, reflecting optimism around capex and domestic demand themes.
Sectoral Winners and Laggards: Where the Money Flowed
Sector performance showed a clear tilt toward cyclical and domestic-growth themes.
Top Gaining Sectors
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Auto — up 2.13%
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Oil & Gas — up 2.04%
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Metals — up 1.88%
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Realty — up 1.61%
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FMCG — up 1.16%
These sectors benefited from value buying, lower crude oil prices, and optimism around Budget-led infrastructure and consumption support.
Top Losing Sector
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IT — down 0.47%
The IT sector underperformed as investors remained cautious on global demand outlook and currency-related uncertainties.
Among notable gainers in the Nifty pack were Adani Ports and Special Economic Zone, Tata Motors and Asian Paints. On the other hand, Shriram Finance and Max Healthcare Institute were among the laggards.
Market Breadth, Volatility and Liquidity Signals Improve
Technical indicators also pointed to improving sentiment. The India VIX fell over 8 percent to 13.87, indicating cooling volatility. A falling VIX often signals reduced fear and more stable market conditions.
Market capitalisation of BSE-listed firms rose by about ₹5 lakh crore in a single day, showing the scale of wealth recovery. Broader indices such as Nifty Midcap and Smallcap also posted gains.
Sudeep Shah of SBI Securities noted,
“This broad-based recovery suggests improving sentiment and a possible attempt by the market to stabilise after recent volatility.”
Such breadth-backed rallies are generally seen as healthier than narrow, stock-specific moves.
Market Breadth Snapshot
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Advancing Stocks: 1,551
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Declining Stocks: 1,639
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52-Week Highs: 13 stocks
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52-Week Lows: 290 stocks
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Upper Circuit (High Band) Hitters: 64 stocks
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Lower Circuit (Low Band) Hitters: 128 stocks
Global Cues Weak, But Domestic Factors Dominate
Interestingly, the rebound came despite weak global signals. Major global indices and futures were trading lower, reflecting caution in international markets.
However, domestic triggers outweighed global cues. Analysts say Indian markets are currently more sensitive to local policy signals, crude oil prices and currency moves than to overseas indices.
This divergence also reflects confidence in India’s growth outlook relative to some global peers.
Here’s What Happened Today and Why Traders Reacted
Today’s rally was driven by a mix of tactical and fundamental factors:
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Budget-related panic selling faded
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Value buying in large-cap stocks
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Falling crude oil prices easing inflation concerns
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Rupee appreciation improving sentiment
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Selective bargain hunting after a sharp fall
Traders often react strongly to tax changes, but once clarity emerges, focus shifts back to earnings and growth.
Sunday’s sell-off was widely seen as a knee-jerk reaction to higher STT on derivatives and borrowing numbers. Monday’s bounce shows that markets are reassessing those fears.
Rupee Strength Adds to Positive Mood
The Indian rupee strengthened to around 91.50 against the US dollar, supported by lower crude prices and likely intervention by the Reserve Bank of India.
A stronger rupee reduces imported inflation and is generally positive for equity sentiment, especially in sectors dependent on imports.
Currency stability also reassures foreign investors, even though there were no major fresh FII inflows reported.
Budget Signals on Growth Continue to Support Sentiment
Market participants also found comfort in the Budget’s long-term growth orientation. The focus on manufacturing, semiconductors, data centres, agriculture, tourism and infrastructure indicates continued capex-led growth.
Ms. Bhuvaneshwari A. of SBI Securities said,
“The Budget strikes a balance between growth and macro-economic stability, reinforcing investor confidence.”
The government’s fiscal deficit target and consolidation path also helped calm concerns about macro stability.
What This Means for Investors and Portfolios
For investors, the rebound offers perspective. Sharp falls and quick recoveries are common around big policy events.
Key portfolio implications:
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Large-cap quality stocks are attracting value buyers
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Capex-linked sectors may see sustained interest
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Volatility could persist in the short term
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Over-leveraged positions remain risky
Nitin Shahi of Findoc said value buying emerged in quality large-caps, especially in infrastructure and energy.
However, some technical experts remain cautious. One market strategist noted that unless Nifty sustains above key moving averages, the broader trend may still be fragile. Immediate resistance is seen near 25,200, while support lies around 24,900.
Is the Rally Sustainable or Just a Relief Bounce?
The current rebound appears to be a relief rally rather than a full trend reversal. For a sustained uptrend, markets will need:
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Stable global cues
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Continued earnings support
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Controlled inflation
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Predictable policy signals
For now, the message to investors is to stay selective. The Budget shock may be fading, but volatility is not gone.
Still, Monday’s session showed one thing clearly — Indian markets remain quick to recover when fundamentals appear intact. For long-term investors, such corrections often create opportunities, provided risk management remains disciplined.
FAQs Sensex, Nifty Recover
Q) Why did the Indian stock market recover quickly after the Budget-day crash despite higher transaction taxes?
The recovery happened mainly because investors differentiated between short-term sentiment shocks and long-term fundamentals. While the hike in securities transaction tax on derivatives initially triggered selling, investors later focused on the Budget’s continued push for infrastructure, manufacturing and capex-led growth. Value buying in large-cap stocks also helped markets rebound.
Q) Does a post-Budget market rebound usually signal a new uptrend or just a relief rally?
A post-event rebound does not always mean a new bull run. Often, it is a relief rally driven by bargain hunting after sharp corrections. For a sustained uptrend, markets typically need earnings growth, stable global cues, and consistent fund flows. Investors should watch whether indices hold key support levels in the coming sessions.
Q) How should retail investors adjust their portfolios after Budget-related volatility?
Retail investors should avoid reacting emotionally to short-term swings. Instead, they can review asset allocation, rebalance if equity exposure has become too high, and focus on quality stocks with strong balance sheets. SIP-based investing and staggered buying can help manage volatility better than lump-sum trades.
Q) Which sectors tend to benefit the most from a capex-focused Union Budget?
Capital expenditure–focused budgets usually benefit infrastructure, capital goods, railways, defence, logistics, and cement sectors. These industries gain from higher government spending, better order visibility, and long project pipelines. Banks that finance such projects may also benefit from rising credit demand.
Q) Why do large-cap stocks lead recoveries after sharp market corrections?
Large-cap stocks are often the first to see buying after corrections because they are considered safer, more liquid, and fundamentally stronger. Institutional investors prefer deploying money in large caps during uncertain times, which helps indices recover even if the broader market remains weak.
Q) What does it mean when market breadth is weak but indices are rising?
When indices rise but more stocks fall than rise, it suggests an index-heavy rally driven by a few large stocks. This can indicate selective optimism rather than broad confidence. Traders often treat such phases cautiously until broader participation improves.
Q) How do crude oil prices and rupee movement influence Indian stock markets after the Budget?
Lower crude oil prices reduce India’s import bill and ease inflation concerns, which is positive for markets. A stronger rupee improves foreign investor sentiment and lowers imported cost pressures. Together, these factors can support equities even when global markets are mixed.
