Market experts expect volatility to run high on Budget day; consumption, infra, banks in focus

The Nifty is nearing its resistance level after its five-day winning streak.

After five days of market gains, February 1 saw a shift toward caution as investors prepared for Finance Minister Nirmala Sitharaman’s presentation of the Union Budget for 2025. With the Nifty 50 posting a 2 percent rise in the week leading up to the budget, market experts are bracing for heightened volatility in today’s session as investors closely monitor the potential impact of the budget. Sitharaman will table the Union Budget at 11 am, with experts hoping to see a delicate balancing act between growth and fiscal prudence.

"The Nifty is approaching resistance levels near the 200-day moving average after recent gains, signaling caution, and high volatility is expected," said Ruchit Jain, Head of Technical Research at Motilal Oswal Financial Services.

Indian stock market benchmarks, Sensex and Nifty 50, were trading marginally in the green after a flat open. The Sensex was up 190.34 points, or 0.25 percent, at 77,690.91, while the Nifty gained 53.20 points, or 0.23 percent, at 23,561.60. Market breadth was positive, with 2,190 shares advancing, 825 declining, and 107 remaining unchanged. Meanwhile, broader markets outperformed, with the BSE Midcap and BSE Smallcap indices each gaining nearly a percent.

Regarding market momentum, Jain believes the Nifty will need to break decisively above 23,900 for a sustainable uptrend.

Rohit Srivastava, founder of Indiacharts.com, noted that the recent surge in the market was triggered by the expectations that the budget would offer some positives. Markets were oversold, creating a solid reason for a spike ahead of the budget, and what the finance minister can do is provide the catalyst needed to drive further upside in the market, he added.

Having said that, Srivastava doesn’t anticipate the expected near-term upmove to mark a trend reversal or signal a return to the bullish momentum the market saw over the past couple of years. While he believes the market might be at a near-term bottom, he cautions that about the uncertainty whether the prolonged consolidation phase will truly end. Therefore, although he predicts an upmove post-budget, he remains doubtful that the budget will provide enough momentum to push the Nifty back to its record highs.

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On the sectoral front, experts are eyeing consumption, infrastructure, capital goods, power, and defense sectors in anticipation of the budget. Srivastava noted the slower pace of growth among infra companies but acknowledged the possibility of increased government expenditure on capex, which could positively impact infrastructure and capital goods stocks.

With the government’s strong focus on defense, power, infrastructure, and capital goods, these sectors are in the spotlight ahead of the 2025 budget. Investors are eagerly awaiting the budget’s allocations to these sectors, hopeful for continued support. The BSE PSU sector, which houses several of these defence, infra and railway names, was up nearly one percent while the BSE Power, BSE Utilities and BSE Capital Goods sector surged over 1.5 percent each.

Srivastava also sees a strong case for an upside in FMCG stocks as the budget may offer some positive triggers that could push consumption themes higher. The FMCG pack has also witnessed a rebound in the past month, after staging a steep decline in the last four months.

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