Bloodbath at Dalal Street – Sensex Nifty down nearly 1%, budget around the corner!

Five days ahead of the Union Budget FY26, the stock market in India plunged drastically. While in previous years it has been witnessed that the market usually surges before budget, investors are booking profits this year even if there’s any upward movement. Sensex and Nifty were down by around 1% as the market session began today. The broader market has been hit more and this article will see why the markets are behaving in such a way ahead of the budget. 

Market Movements

At around 10.45 am, Sensex and Nifty were down by around 1%. A total of 2695 shares declined as the market began, with just 550 shares moving up the ladder and 155 remaining unchanged. 

The broader market has felt more heat as the selloff hit the mid-cap and small-cap stocks the most. The BSE mid-cap and small-cap indices tanked by 3% and 4% respectively in the early hours of the day. 

Today global market also witnessing global indices go down which is a major trigger for domestic investors. The NASDAQ Composite Futures and S&P 500 Futures were down by 2% and 1% respectively. Even Japan’s Nikkei lost around 0.3% however, China’s Blue-chip CSI 300 rose by 0.2% and Hang Seng rose 0.9%. 

At around 1 p.m. today, the scenario remained the same with Sensex falling by 732 points, or 0.98%, and Nifty 50 fell by 1.01% or 233.15 points. All the sectoral indices on NSE are in red except for the PSU bank index which has marginally gone up by around 0.1% at around 1 p.m.

Reasons Behind the Market Plunge

So, what’s pulling the market down ahead of the Union Budget? Here are the reasons to consider – 

1. The major future indices in the US market and also in the Asian markets have been hit hard with the introduction of a new open-source AI model, which is going to be a free platform by DeepSeek, a Chinese tech firm. This is a big blow to OpenAi’s ChatGPT. 
2. Secondly, Donald Trump has imposed retaliatory levies on Colombia along with sanctions to stop deported migrants from being carried by military aircraft. This has strengthened the dollar further which in turn taking a toll on the Asian markets including the Indian stock market. 
3. Due to the volatile market scenario, the pre-budget rally is also at stake and investors are booking profits from any surge in the market. This is in turn dragging the market down further. 
4. Foreign portfolio investors (FPIs) turned out to be net sellers in January by already pulling out Rs.69080 crore from the markets. This has been a huge setback for the market as well. 
5. The Fed rate decision on 29 January is also adding fuel to the fire as all are awaiting the decision of whether the rate will be further slashed or not, especially when Trump is all for bringing down the borrowing cost. However, since two significant rate cuts happened last year, the expectation for further cuts is low amongst investors as of now. 
6. Apart from the global cues, the third quarter results which are being announced now, are mixed. This is also putting pressure on the market dynamics. 

Wrapping up 

So, as the Fed rate decision date and budget date are nearing, the market is expected to get heated up further and it will be interesting to see how these factors change the market dynamics..

Source: Moneycontrol

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