Sensex recovers 1,600 pts from day's low, Nifty reclaims 25K; 5 key factors behind market rebound

Share Market Today: Sensex, Nifty on Budget Day

• Sensex recouped 1,600 points; Nifty reclaimed 25,000 amid Budget volatility.
• India may buy Venezuelan oil, boosting market sentiment.
• Gold and silver prices fell sharply, shifting investor focus to equities.

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The benchmark equity indices Sensex and Nifty posted remarkable recovery from the day’s lows and pared losses on February 1 amid Budget-related volatility. Sensex recouped 1,700 points, while the broader Nifty reclaimed the 25,000-mark to trade at 25,100.

At around 1:30 pm, the Sensex was trading at 81,591.37, down 678.41 points or 0.82 percent, while the broader Nifty was at 25,040.60, down 280.05 points or 1.11 percent.

Bharat Electronics, Tata Motors Passenger Vehicles and Power Grid Corporation of India were among the top gainers in the Nifty50 pack, rising up to 2 percent, while Hindalco Industries and Nestle India were among the major laggards, declining up to 4 percent. Market breadth was positive as about 1886 shares advanced, 1397 shares declined and 151 shares unchanged.

Finance Minister Nirmala Sitharaman presented her ninth Union Budget today.

Key factors behind market rise

1) Budget announcement: There was a major push to domestic manufacturing, skilling and more job creation. Policy push toward semiconductors, rare earths, biosimilars and clean tech aims to reposition India as a future-growth story. In a move aimed at protecting minority shareholders while curbing tax arbitrage by promoters, the Finance Minister also proposed a fresh overhaul of the taxation framework for share buybacks.

2) India to buy Venezuelan oil: U.S. President Donald Trump said India will buy Venezuelan oil, instead of sourcing oil from Iran. Trump made the remarks while speaking to reporters aboard Air Force One, en route to Florida from Washington, DC. The comments came a day after the United States indicated that India could soon resume purchases of Venezuelan oil to replace imports of Russian crude.

Any clarity on alternative oil supplies helps reduce concerns over energy security and import costs, which supports overall market sentiment.

3) FII buying: Foreign institutional investors (FIIs) bought equities worth Rs 2,251.37 crore on Friday, according to exchange data.

However, Vijayakumar noted that foreign portfolio investors continued to remain net sellers in January.

"The FPI selling continued in January, with total selling through exchanges touching Rs 38,740 crore. However, the intensity of selling declined sharply in the last few days of the month. FIIs will be looking for cues from the Budget before deciding their strategy going forward," he said.

4) Decline in prices of precious metals: Gold and silver prices witnessed a sharp correction on the MCX, with futures falling up to 6 percent at the open on February 1. As a result, gold exchange-traded funds declined by up to 16 percent.

"The sharp correction in gold and silver, if it persists, can divert investor interest from precious metals to equities," Vijayakumar said.

5) Rebound in IT shares: The Budget raised the safe harbour threshold for IT services sharply from Rs 300 crore to Rs 2,000 crore, expanding the number of firms eligible for predictable tax margins. A uniform safe harbour margin of 15 to 15.5% was introduced under a consolidated “Information Technology Services” category, covering software development, IT-enabled services, KPO, and contract R&D. The approval process was also simplified. Safe harbour clearances will now be automated and rule-based, eliminating discretionary tax scrutiny. Companies can opt for faster Advance Pricing Agreement resolutions within two years, with benefits extending for up to five continuous years. A key long-term incentive was the tax holiday until 2047 for foreign companies providing cloud services through local data centres, a move expected to encourage global cloud players to deepen their India footprint.

Technical outlook

Anand James, Chief Market Strategist at Geojit Investments, said the Nifty has managed to hold above key support levels.

"The 25,180 region has held ground so far, preventing a potential fall to 24,715-24,650-24,580. Expect swings and attempts to test both ends of the 25,180–25,400 band. Oscillators permit further upside, with 25,580–25,800 in sight, but weak momentum raises questions on sustainability," he said.

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