Nifty Rebounds Past 25,000 as Markets Recover from Budget Selloff

Market Rebounds After Post-Budget Volatility

Indian equity markets witnessed a significant pullback on Monday, February 2, 2026, recovering sharply from the selloff that followed the Union Budget. The benchmark Nifty 50 index staged a remarkable intraday recovery, closing near the 25,100 mark with a gain of 263 points, or 1.06%. Similarly, the Sensex surged by 944 points, signaling a return of investor confidence after a period of uncertainty.

The session began on a weak note, with the Nifty slipping to an early low of 24,679. However, buying interest emerged at lower levels, and the index steadily advanced throughout the day. This positive momentum resulted in the formation of a bullish candle on the daily chart, indicating that buyers successfully overpowered sellers.

Technical Indicators Signal Stabilization

Technical indicators are showing early signs of market stabilization. The daily Relative Strength Index (RSI), a key momentum oscillator, had corrected to a low of 30.93, nearing oversold territory. On Monday, it bounced back to 39.20, suggesting that the immediate downside pressure is easing. This technical rebound points towards a potential phase of consolidation or further recovery in the near term.

From a technical standpoint, the market found support near the 24,700 level for the Nifty and the 80,400 level for the Sensex before bouncing back sharply. From the day's lowest point, the indices rallied over 400 and 1,300 points, respectively. This price action has formed a promising reversal pattern on intraday charts, supporting the case for a continued uptrend from current levels.

Broad-Based Recovery and Sectoral Performance

The recovery was not limited to a few heavyweight stocks but was broad-based, indicating improving market sentiment. The advance-decline ratio was firmly in favor of the bulls, with 310 stocks from the Nifty 500 universe closing in positive territory. This widespread participation suggests a collective move towards stability after recent volatility.

Sectoral performance was mixed. The Capital Market Index was the standout performer, rallying over 3%. However, the IT index was a notable laggard, shedding nearly 0.50% despite the strong market momentum. This divergence highlights selective buying interest among investors.

Top Performing Stocks

Several stocks posted significant gains, leading the market's recovery. Power Grid Corp, Adani Ports, and Bharat Forge were among the top performers.

Unpacking the Reasons for the Rebound

The market's recovery can be attributed to investors reassessing the Union Budget 2026 with a calmer perspective. The initial panic was largely driven by concerns over a potential hike in the Securities Transaction Tax (STT) and the absence of major market-moving announcements. Once the dust settled, the market began to price in the fact that there were no significant negative surprises in the budget.

This shift in sentiment was supported by improving macroeconomic signals. The Indian rupee strengthened from its record lows, supported by rising forex reserves and proactive liquidity management by the Reserve Bank of India. Furthermore, a decline in global crude oil prices helped ease concerns about inflation.

Budget Impact on Key Sectors

The Union Budget provided a significant boost to specific sectors. Data center and AI-linked stocks saw strong traction following the announcement of a long-term tax holiday for global cloud service providers operating data centers in India. This move is seen as reinforcing India's position as a structural hub for digital infrastructure, leading to targeted buying in technology, power, and infrastructure-related companies.

Analyst Viewpoint

Despite the strong bounce, some analysts remain cautious. Rupak De, Senior Technical Analyst at LKP Securities, noted that while the rebound is a normal market reaction after a sharp fall, the broader trend remains weak. He suggested that as long as the Nifty stays below its 200-day moving average (DMA), sentiment is likely to remain negative. According to this view, any bounce could be an opportunity to exit leveraged long positions or create short positions.

Conclusion

The Indian stock market demonstrated resilience with a strong comeback, driven by a reassessment of the Union Budget and supportive macro-economic cues. While technical indicators suggest a potential for stabilization, the broader market trend will be closely watched. Investors are now looking ahead to corporate earnings, with several major companies, including Hyundai Motor India, Indus Towers, and Tata Chemicals, scheduled to release their quarterly results.