Sensex, Nifty open lower ahead of Union Budget
What's the story
The Indian stock market opened on a negative note in a special session today, ahead of the Union Budget announcement. The BSE Sensex fell by 92 points or 0.11% to trade at 82,178, while the NSE Nifty 50 index declined by 47 points or 0.18% to settle at around 25,274. Investors are awaiting indications of increased public spending to boost growth and support export-oriented sectors under pressure from US tariffs.
Sector performance
Metal stocks were particularly hard hit
The 30-share Sensex saw major contributors to the decline such as Tata Steel, Infosys, Tech Mahindra, and Bajaj Finserv. These stocks fell between 1% and 2% in early trading. The metal stocks were particularly hard hit with the sector index plummeting by a whopping 4.4%. This was in line with a global pullback in metal prices due to a stronger US dollar and profit-booking after recent gains.
Market reaction
Broader markets also took a hit
The broader markets also took a hit with small-cap and midcap indices declining by 1.5% and 0.8%, respectively. However, the bond and currency markets remained closed for this session. Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments, said that investors don't expect major tax reliefs in this Budget as the previous one had already provided significant income tax reliefs. He hinted at possible tweaks in certain taxes but no major changes are expected today.
Budget expectations
Defense stocks likely to remain in focus
Vijayakumar emphasized that "from the market perspective, a fiscally prudent, growth-oriented Budget is desirable." He also mentioned rumors of exemption from long-term capital gains tax for certain categories of FIIs which could trigger a market rally. Defense stocks are likely to remain in focus with higher allocation for defense being a given. Export segments such as manufacturing exports could also be on investors' radar.
Global impact
Global markets remained under pressure on Friday
Global equities fell for the second straight session on Friday as President Trump named former Federal Reserve governor Kevin Warsh as his choice to head the central bank. The move, along with a hotter-than-expected inflation reading, rattled investors already on edge over the policy outlook. Oil prices eased slightly on Friday but remained near six-month highs amid ongoing US-Iran tensions. Brent crude futures settled at $70.69 per barrel while US benchmark West Texas Intermediate slipped to $65.21 per barrel.