The stock market indices displayed a flat performance in a special trading session held on Sunday, as investors remained cautious ahead of the anticipated Union Budget for 2026. At 9:35 AM, the Nifty 50 stood at 25,302.05, reflecting a decline of approximately 16 points, while the Sensex saw a slight uptick, rising over 18 points to reach 82,301.91. Both the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) confirmed that trading would continue as usual on Budget day, maintaining the regular market hours.
In a notable twist, precious metals faced significant downturns, with gold and silver prices plummeting to lower circuit levels in futures trading. For April 2, 2026, gold futures dropped by ₹9,140, or 6%, settling at ₹1,43,205 per 10 grams. Similarly, silver futures for March 5, 2026, fell by ₹17,515, also 6%, reaching ₹2,74,410 per kg. The declines in commodity prices extended to shares in the Multi Commodity Exchange (MCX), which saw a 10% decrease, hitting a lower circuit at ₹2,145.25. Market analysts attributed this sell-off to profit-booking activity, especially following Friday’s sharp declines which marked the steepest single-day fall for both metals.
As the market prepared for the Union Budget, speculation regarding its contents grew. Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, expressed that investor expectations leaned towards limited tax relief, particularly since the previous budget had already provided considerable income tax benefits. He highlighted the possibility of adjustments in certain tax areas, interpreting any potential increase in long-term capital gains tax exemptions as a positive development.
The focus also shifted to specific sectors expected to be influenced by the budget. A likely increase in defense spending was noted, signaling continued attention on defense stocks. Moreover, the budget’s implications for export growth, particularly in the manufacturing sector, were anticipated as focal points for investors. Other areas of observation included proposed mergers of public sector banks and disinvestments in public sector units (PSUs).
Market trends from past budgets indicate that while some budgets lead to substantial rallies, others have prompted more muted responses or declines. Generally, positive market reactions correlate with budgets that emphasize growth, infrastructure spending, and tax stability. For example, in 2017, when then-Finance Minister Arun Jaitley presented the budget with a focus on middle-class tax relief, the Sensex surged by about 1.7%, and the Nifty increased by nearly 1.8%.
However, not every budget has elicited enthusiasm from the market. In 2016, new dividend taxation dampened sentiment, resulting in a negative closing for the Sensex. The introduction of long-term capital gains tax on listed equities in 2018 caught investors off guard, leading to a 6.8% decline in the following sessions. The more recent budget in 2023 produced a flat response, as it adhered to fiscal discipline without introducing major reforms to stimulate excitement.
With the Union Budget of 2026 on the horizon, the overall market environment appears unstable. Equity indices have retreated from recent highs, foreign portfolio investors were identified as net sellers, and various global factors, including interest rate changes, geopolitical disturbances, and trade policies, continue to shape market sentiment. In light of these dynamics, significant movements in the stock market on Budget Day are anticipated.
