Nifty 50's future trajectory: Key technical levels to monitor post-Budget
03 Feb 2025

The Indian stock market witnessed losses in early trade today. The Sensex plummeted over 700 points, while the Nifty slipped below the 23,250 mark.

The fall was triggered by weak global cues, investor reactions to Union Budget 2025, and new tariffs imposed on Mexico, Canada and China by US President Donald Trump.

The broader markets also witnessed a massive sell-off with BSE Midcap and Smallcap indices falling over 1% each.

But what lies ahead for India's stock market this year?

Union Budget 2025's impact on market trends
Budget influence

The Union Budget 2025 raised the income tax exemption limit under the new tax regime to ₹12 lakh.

The move, which surpassed market expectations of a hike to ₹10 lakh, was aimed at boosting consumption, savings, and investment.

However, worries were expressed over the government's diminished focus on infrastructure capital expenditure (capex) for FY25 amid delays in spending.

As a result, leading railway, defense and infra stocks were down by up to 9% today.

Global factors and RBI's upcoming meeting
Market pressures

US President Donald Trump's announcement of new tariffs on Canada, Mexico, and China have revived fears of a trade war.

The strengthening of the US dollar and continued outflows of foreign investors further dampened investor confidence. Earlier today, Indian rupee fell below 87-per-dollar mark for first time.

All eyes are now on the Reserve Bank of India's Monetary Policy Committee (MPC) meeting this week, with experts predicting a 25 basis point rate cut to boost economic growth and consumer demand.

Market volatility and sectoral performance post-Budget
Expert insights

Ajit Mishra, SVP of Research at Religare Broking Ltd., observed high market volatility during the special trading session for the Union Budget.

The Nifty 50 gained momentum initially but couldn't breach key resistance at the 200-day exponential moving average (DEMA), ending at 23,482.15.

Sectorally, FMCG, auto, and real estate stocks witnessed buying interest due to tax relief measures announced in the Budget. However, defense energy and infrastructure stocks showed weakness.

Technical analysis of Nifty 50's post-Budget performance
Market forecast

Rupak De, Senior Technical Analyst at LKP Securities, noted sharp swings in the Nifty 50 during the Budget session.

The index has support at 23,280 and as long as it stays above this level, the overall trend is likely to remain positive.

On the upside, the short-term target for Nifty remains at 23,700-24,000.

However, a break below 23,280 could trigger further downside pressure leading to panic selling in the market.