Markets reacted negatively after Finance Minister Nirmala Sitharaman announced a sharp hike in STT on derivatives. STT on futures was increased to 0.05% from 0.02%, while options saw a significant jump to 0.15% from 0.01%. The move raised concerns about higher transaction costs and potential impact on trading volumes.
As a result, brokerage, exchange-related stocks and high-beta counters bore the brunt of the sell-off. On February 1, the Sensex plunged 1,547 points to close at 80,722.94, while the Nifty 50 fell 495 points to end at 24,825.45.
Key Technical Levels to Watch on Monday
Market experts suggest that trading on Monday will be highly level-driven. According to analysts, Nifty 50’s immediate support zone lies between 24,500 and 24,400. This region holds strong significance due to high Put Open Interest, making it a crucial near-term floor.
On the upside, resistance is seen between 25,000 and 25,150. A decisive breakout above this zone could open the path toward 25,550, though such a move may require strong global cues and fresh domestic triggers.
Sensex Outlook Remains Volatile
For the Sensex, analysts believe that as long as the index trades below 81,300, sentiment may remain weak. On the downside, further correction could test levels around 80,000, with deeper selling potentially dragging it toward 79,500 if volatility intensifies.
Experts advise traders to adopt a cautious approach and avoid aggressive positions during the opening hour, given the prevailing uncertainty and heightened volatility.
Broader Markets and Sectoral Impact
The broader market witnessed heavy damage on Budget day, with midcap and smallcap indices declining sharply. PSU banks, metals, oil and gas, auto, FMCG, and realty stocks faced widespread selling pressure, reflecting risk-off sentiment.
Banking stocks also ended lower, with the Nifty Bank index falling nearly 2%. Analysts attribute the weakness to concerns over liquidity, valuation pressures, and the overall risk environment.
Long-Term Fundamentals Still Intact
Despite near-term volatility, market experts remain constructive on the long-term outlook. The Budget’s emphasis on fiscal discipline, infrastructure spending, and a record capital expenditure plan continues to support India’s growth story.
Analysts note that capex-led growth, improving manufacturing output, and structural reforms could help restore confidence once the immediate impact of higher transaction taxes settles.
For long-term investors, market corrections may offer selective buying opportunities in fundamentally strong sectors, particularly capital goods, infrastructure, and manufacturing.