Dalal Street Bounces Back: Markets Recover Following Budget Day Sell-Off

February 2, 2026 — Indian equity benchmarks, the BSE Sensex and NSE Nifty 50, staged a resilient recovery in early trade on Monday, rebounding from a sharp sell-off triggered by the Union Budget 2026-27 announcements. After a turbulent special Sunday trading session that saw the Sensex plunge over 1,500 points, investors returned to the floor with a “buy-on-dips” strategy, seeking value in blue-chip stocks.

Early Morning Recovery

The markets opened on a cautious note but quickly found their footing. In the first hour of trade:

• BSE Sensex: Climbed 302 points to reach 81,024.94.
• NSE Nifty 50: Gained 59.25 points to trade at 24,884.70.

This recovery follows a “bloodbath” on Budget Day (February 1), where the Sensex ended 1.88% lower and the Nifty tanked nearly 2%. The primary catalyst for that decline was the surprise proposal to hike the Securities Transaction Tax (STT) on derivatives—a move aimed at curbing speculative trading in the Futures and Options (F&O) segment.

Key Drivers of the Rebound

Market analysts suggest that while the STT hike remains a bitter pill for high-frequency traders, the broader market is now focusing on the long-term growth positives embedded in Finance Minister Nirmala Sitharaman’s ₹53.5 lakh crore budget.

1. Value Buying in Heavyweights: Institutional investors stepped in to pick up quality stocks at lower valuations. Major gainers in early trade included Adani Ports, Reliance Industries, HDFC Bank, and Larsen & Toubro.
2. Supportive Global Cues: A significant drop in global oil prices provided a much-needed tailwind. Brent crude tanked over 4% to settle around $66.45 per barrel, easing concerns over India’s trade deficit and inflationary pressure.
3. Growth-Oriented Policies: Beyond the tax tweaks, the budget’s focus on a ₹11 lakh crore capital expenditure (capex), the India Semiconductor Mission 2.0, and incentives for global data centers has kept long-term sentiment constructive.

Top Gainers and Laggards

The Road Ahead

Despite the bounce, the market remains “cautious to mildly bearish” in the near term. Experts believe volatility may persist as the market fully absorbs the new tax structures, which are set to take effect from April 1, 2026.

“The Budget reflects a shift from short-term stimulus to long-term structural resilience,” noted Ajay Bagga, a prominent market expert. “While the STT hike dented sentiment, the focus on manufacturing and fiscal discipline provides a solid foundation for the year ahead.”

As the session progresses, all eyes will be on Foreign Institutional Investor (FII) activity to see if the early morning recovery can be sustained through the closing bell.