The Indian stock market recently reacted to the Union Budget announcement with minimal changes, as investors assessed the implications of capital expenditure growth and personal tax reductions. While some sectors showed potential for growth, overall market sentiment remained cautious.
Indian Stock Market Reaction
The benchmark BSE Sensex saw a slight increase of 5.39 points, or 0.01%, closing at 77,505.96. In contrast, the Nifty 50 index experienced a decrease of 26.25 points, or 0.11%, finishing at 23,482.15. Analysts noted that the government’s capital expenditure growth of 10% year-on-year for FY26 was below expectations, which negatively impacted investor sentiment.
Key sectors such as railways, defense, and infrastructure faced challenges that could affect market performance. Although consumption-based sectors were anticipated to benefit from tax cuts, their limited market share meant their influence on the overall market was modest. As disposable income rises and business conditions improve, there is potential for the market to reflect broader economic advantages throughout the year.
US Stock Market Declines
In the United States, stock markets faced declines due to concerns over new tariffs announced by the White House. The imposition of tariffs of 25% on imports from Canada and Mexico, along with a 10% tariff on Chinese goods, led to a sell-off in major indices. The Dow Jones Industrial Average dropped by 337.47 points, or 0.75%, while the S&P 500 and Nasdaq Composite also experienced losses of 30.64 points (0.50%) and 54.31 points (0.28%), respectively.
The announcement of tariffs raised fears of escalating trade tensions that could impact economic growth and corporate earnings. Investors are closely monitoring the situation, as potential retaliatory measures from affected countries could complicate the trade landscape further. This uncertainty has fostered a cautious market sentiment, prompting many investors to reassess their positions in light of the evolving geopolitical climate.
European Market Performance
In contrast, European markets reached record highs, driven by strong earnings reports from major technology companies. The pan-European STOXX 600 index closed up by 0.13%, primarily supported by a 1.7% increase in technology stocks. Companies like Novartis and Hexagon reported robust earnings, alleviating concerns regarding the pace of economic recovery in the region.
The positive performance in Europe reflects a broader trend of resilience in the technology sector, which is a key growth driver amid ongoing economic challenges. Investors are increasingly optimistic about the potential for continued expansion in this sector, as companies adapt to changing market conditions and consumer demands.
Technical Analysis of Nifty Index
From a technical standpoint, the Nifty index exhibited volatility during the Budget session. Analysts noted the formation of a small-bodied candle on the daily chart, indicating market indecision. Support for the Nifty has been established at 23,280, and as long as the index remains above this level, the trend may stay positive.
There is potential for upward movement towards the 23,700–24,000 range in the short term. However, a drop below 23,280 could incite panic among investors. Market sentiment has been described as neutral, with mixed performance across various sectors. Out of 4,037 stocks traded on the BSE, 1,826 saw declines, while 2,085 experienced advances, and 126 remained unchanged.
Trading Activity Highlights
In terms of trading activity, Kalyan Jewellers and RVNL were the most active stocks by turnover, reaching values of Rs 2,489.51 crore and Rs 2,137.26 crore, respectively. Other notable mentions include Zomato, Mazagon Dock Shipbuilders, and Hindustan Aeronautics Ltd, which also recorded significant trading volumes.
On the volume front, Vodafone Idea led with 80.70 crore shares traded, followed by Suzlon Energy and Easy Trip Planners. The high trading volumes in these stocks indicate heightened interest from market participants, reflecting ongoing trends and investor sentiment. Additionally, several stocks, including Blue Star and Zensar Technologies, saw strong buying interest, suggesting pockets of optimism amid broader market uncertainty.
📎 Related coverage from: economictimes.com
