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Union Budget 2026: Market Shows Cautious Reaction

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  Published in Stocks and Investing on Saturday, January 31st 2026 at 23:36 GMT by Business Today
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Union Budget 2026: Market Navigates Initial Reaction - A Deeper Dive into Key Indices

Sunday, February 1st, 2026 - The Indian stock market is currently digesting the implications of the Union Budget 2026, presented yesterday, January 31st. As predicted, the budget announcement triggered volatility, and initial trading suggests a cautious, wait-and-see approach from investors. This article expands on the immediate post-budget analysis, outlining key levels for the Nifty, Sensex, and Nifty Bank, and exploring the broader economic factors at play.

The budget, widely anticipated to focus on infrastructure development and fiscal consolidation, appears to have struck a balance, pleasing some sectors while leaving others slightly underwhelmed. Initial reactions suggest a muted positive response, with investors carefully evaluating the long-term impact of the proposed policies.

Nifty 50: Testing Resistance, Support Holds Firm

Following a brief initial rally, the Nifty encountered resistance at 22,550, ultimately closing at 22,470. This suggests that while there's bullish sentiment, it's currently capped by concerns surrounding implementation risks associated with the budget proposals. The immediate support level remains crucial, currently pegged at 22,400. A breach below this level could initiate a correction, potentially testing the 22,250 mark. Analysts are watching for confirmation of this support hold - a strong bounce off 22,400 would signal continued bullishness. Conversely, a sustained break below would indicate a shift in sentiment.

Trading Strategy (Nifty): The suggested strategy - buying above 22,500 with a stop loss at 22,450, and selling below 22,400 with a stop loss at 22,500 - remains valid for short-term traders, but requires vigilant monitoring. A more conservative approach might involve waiting for a clearer breakout direction before committing capital.

Sensex: Similar Dynamics to Nifty

The Sensex mirrored the Nifty's performance, facing resistance at 74,800 and settling at 74,500. The support level at 74,300 is now a critical point to watch. A move below this could potentially drag the index towards 74,000. The resistance at 74,800-75,000 appears strong, requiring significant positive catalyst to overcome. The banking sector's performance within the Sensex will be a key driver of its trajectory, given its significant weightage in the index.

Trading Strategy (Sensex): The 'buy above 74,800 / stop loss 74,500' and 'sell below 74,300 / stop loss 74,500' strategy holds, but traders should factor in the broader global market conditions. Any adverse developments internationally could amplify downward pressure on the Sensex.

Nifty Bank: Sector-Specific Concerns Drive Caution

Nifty Bank is currently oscillating around the 45,000 resistance level, with support established at 44,700. The budget's provisions concerning the financial sector, particularly regarding NPA resolution and capital infusion for public sector banks, are being closely analyzed. A dip below 44,700 could signal increased bearishness. The resistance between 45,200-45,500 is proving difficult to breach, indicating potential profit-booking at these levels.

Trading Strategy (Nifty Bank): The 'buy above 45,000 / stop loss 44,800' and 'sell below 44,700 / stop loss 45,000' strategies apply, but require careful consideration of sector-specific news and earnings announcements. The health of major private and public sector banks will significantly influence the Nifty Bank's performance.

Beyond the Levels: Key Budget Impacts & Broader Economic Outlook

The stock market isn't reacting in isolation. Several key budget provisions are expected to shape investor sentiment in the coming weeks. The increased focus on infrastructure spending is projected to benefit cement, steel, and construction companies. However, the emphasis on fiscal prudence, including potential tax adjustments, may dampen enthusiasm in certain sectors. The government's commitment to rural development and agricultural support could positively impact consumer-facing companies.

Global cues also remain crucial. Rising crude oil prices, geopolitical tensions, and the monetary policy stance of the US Federal Reserve could all exert pressure on the Indian market. Domestically, the monsoon season and the upcoming state elections will also be important factors to watch.

Disclaimer: This analysis is based on current market data and expert opinions. Investment decisions should be made after careful consideration of individual risk tolerance and consultation with a qualified financial advisor.