Indian Stock Market Preview: February 2, 2026
Introduction
Indian equity markets are entering a high-volatility environment this Monday, February 2, 2026, as investors continue to digest the significant policy shifts announced in the Union Budget on Sunday. The market is currently reeling from one of its sharpest Budget-day corrections in recent history, primarily driven by a massive 150% hike in Securities Transaction Tax (STT) on Futures and a 50% increase on Options trading. The Nifty 50 concluded Sunday's session at 24,825.45, reflecting a loss of 1.96%, while the Sensex settled at 80,722.94.
For retail investors, today's session is critical as Foreign Institutional Investors (FIIs) return from their holiday to react to the Budget proposals. While the GIFT Nifty is providing a slight glimmer of hope with a marginally positive trade, the underlying technical damage and a surging India VIX suggest that defensive positioning is the need of the hour. This article provides a comprehensive roadmap of technical levels, global cues, and stock-specific triggers to watch during the day.
Market Opening Expectations
Expected Opening Ranges
Based on early morning indicators, the domestic indices are poised for a cautious start. The GIFT Nifty is trading at 24,880 (+0.15%), suggesting a modest 26-point positive gap for the Nifty 50.
| Index | Expected Opening Range |
|---|---|
| Nifty 50 | 24,850 - 24,900 |
| Sensex | 80,800 - 81,000 |
| Bank Nifty | 58,450 - 58,550 |
Opening Sentiment & Confidence
The overall sentiment remains CAUTIOUS TO WEAK. Although the GIFT Nifty is green, the markets are trading below their critical 200-day Simple Moving Average (SMA) and Exponential Moving Average (EMA). The India VIX (volatility index) surged 10.73% to reach 15.10 on Sunday—its highest close since June 2025—indicating that the fear factor is currently elevated. Our confidence level for a sustained recovery today is MEDIUM given the technical damage.
Global Market Overview
Asian Markets
Asian markets are presenting a divided front in early Monday trade, reflecting broader global uncertainty and a risk-off sentiment in alternative assets like gold and bitcoin.
- Hang Seng Index: Declined sharply by 1.61% to 26,947.09, shedding over 440 points.
- Nikkei 225: Gained 0.54% to 53,609.29, showing relative resilience despite regional weakness.
- ASX 200 (Australia): Dropped 0.87% to 8,791.70.
- China PMI: Manufacturing expansion was noted with a PMI of 50.3, though this has yet to lift regional spirits significantly.
US Market Cues
Wall Street ended mixed on Friday, but the futures market for Monday is signaling potential headwinds for global equities:
- Dow Futures: Down 143 points (-0.3%).
- S&P 500 Futures: Down 0.6%.
- Nasdaq-100 Futures: Trading nearly 1% lower.
Currency and Commodities
- USD/INR: The Rupee is under pressure, trading at 91.79 (up 0.13%). Analysts expect a further 1% depreciation, with a day's range of 91.75 - 91.81.
- Crude Oil: Volatility continues as markets monitor Iran negotiations. Brent Crude and WTI remain under pressure, adding a layer of uncertainty to energy-sensitive sectors.
Key Technical Levels for February 2, 2026
Nifty 50 Analysis
The Nifty 50 has slipped below its long-standing consolidation range of 24,900 - 25,450. As long as the index remains below the 25,000 psychological barrier, any intraday rebounds are likely to be met with selling pressure from bears.
| Support Levels | Value | Resistance Levels | Value |
|---|---|---|---|
| Immediate Support | 24,650 - 24,600 | Immediate Resistance | 24,900 - 25,000 |
| Primary Support | 24,572 | Primary Resistance | 25,160 - 25,200 |
| Strong Support | 24,500 - 24,400 | Strong Resistance | 25,300 - 25,350 |
| Critical Support | 24,300 | Major Resistance | 25,815 |
| Pivot Point | ~24,946 |
Bank Nifty Analysis
The banking index has been hit hard by concerns over rising bond yields and the government's massive ₹17.2 lakh crore borrowing program for FY27. The Max Pain level sits at 60,000, suggesting the index might consolidate before finding clear direction.
| Support Levels | Value | Resistance Levels | Value |
|---|---|---|---|
| Immediate Support | 58,300 - 58,500 | Immediate Resistance | 59,500 - 59,700 |
| Primary Support | 59,100 | Psychological Barrier | 60,000 |
| Strong Support | 57,893 | Strong Resistance | 60,500 - 60,771 |
| Pivot Point | ~58,600 |
Option Data Deep-Dive
Data from the derivatives segment confirms a bearish bias among market participants:
- Put-Call Ratio (PCR): The Nifty PCR stands at 0.59. Historically, a PCR below 1.0 indicates that call writers (bears) are more active than put writers (bulls).
- Nifty Max Pain: Currently calculated between 25,300 - 25,350, which may act as a gravitational pull if a recovery rally begins.
- Concentration: The highest Call Open Interest (OI) is at the 25,500 strike (1.61 crore contracts), while the highest Put OI is at 24,500 (65.91 lakh contracts), defining the broad trading range.
- Bank Nifty PCR: Slightly more neutral, hovering just above 1.0, with Max Pain around the 60,000 mark.
FII and DII Activity Analysis
The market dynamics are currently a battleground between persistent foreign selling and resilient domestic buying. In January 2026, FIIs pulled out over ₹41,000 crore, while DIIs supported the market with nearly ₹70,000 crore in net purchases.
Recent Institutional Flows (₹ Crores)
| Date | FII Net Action | DII Net Action |
|---|---|---|
| Feb 1, 2026 (Budget) | -588 to -2,000 | -683 |
| Jan 30, 2026 | +2,251 | -601 |
| Last 5 Days (Approx) | -5,000 to -7,000 | +3,000 to +4,000 |
| Jan 2026 (Full Month) | -41,435 to -43,000 | +69,221 to +69,000 |
10 Stocks to Watch Today
- BSE Limited (BSE): Sell on Rise. The 150% STT hike on futures is a structural negative for exchanges. The stock fell 5-10% on Sunday with massive volumes of ₹4,200 crore. Resistance at previous close.
- Bharat Electronics (BEL): Buy on Dip. A prime beneficiary of the 18% hike in Defence Capex. Focus on indigenous drone tech and jet engines makes it a long-term pick. Support at ₹275-280.
- Hindustan Aeronautics (HAL): Buy on Dip. Similar to BEL, the focus on "Make in India" defense manufacturing provides a strong order book visibility. Support at ₹4,150-4,200.
- ITC Limited (ITC): Technical Watch. The market is evaluating the tobacco excise duty restructuring. A projected cigarette price hike of ₹55 per pack may cause short-term margin fluctuations. Watch the ₹450 support zone.
- IDBI Bank (IDBIBANK): News Driven. The disinvestment process has reached Stage 3. Potential technical and financial bids could lead to a significant re-rating. Key level: ₹75-77.
- Biocon / Sun Pharma: Buy on Dip. The government's plan to establish India as a biopharma manufacturing hub is a major tailwind. These stocks showed relative strength even on Budget Day.
- Rail Vikas Nigam (RVNL): Breakout Watch. Allocated funds for seven new high-speed rail corridors. Monitor for a breakout above the ₹300-305 zone.
- Tata Chemicals / UPL: Earnings Watch. Both companies report Q3 results today. The chemical sector has been consolidating, and management commentary on global pricing will be key.
- Paytm / PB Fintech: Earnings Watch. Results are due today. As fintech remains under the regulatory scanner, the performance metrics will be scrutinized by the street.
- MOIL Limited: Positive News. The board approved a JV for manganese ore mining in Madhya Pradesh, signaling long-term capacity expansion.
Additional Results Today: Thermax, City Union Bank, Indus Towers, Hyundai Motor India, and Bajaj Housing Finance.
Events Calendar: February 2, 2026
- Quarterly Earnings: Over 80 companies are reporting today, ensuring high stock-specific volatility throughout the session.
- STT Impact Assessment: Brokerages and exchanges will be in focus as the market calculates the exact impact of higher trading costs on retail volumes.
- FII Post-Holiday Reaction: The first full trading day for global funds post-Budget could see an acceleration in flow direction.
- Government Borrowing: Impact on bond yields continues as the market reacts to the ₹17.2 lakh crore borrowing target.
- US Fed Meeting: Pre-event caution ahead of the Feb 4-5 FOMC meeting will likely keep global markets subdued.
Sectoral Outlook
Potential Outperformers
- Defense & Railways: Direct beneficiaries of capital expenditure hikes.
- Pharmaceuticals: Supported by the new Biopharma Hub initiative.
- Textiles: Benefit from export incentive schemes and mega textile park plans.
Potential Underperformers
- Brokerages & Exchanges: The STT hike is expected to dent earnings by 4-10%.
- PSU Banks: Under pressure from rising yields and potential MTM (Mark-to-Market) losses on bond portfolios.
- Small & Midcaps: Likely to see reduced speculative interest due to higher F&O costs.
Trading Strategy for Today
For Intraday Traders
Adhere to a strict level-based trading approach. With the VIX at 15.10, whipsaws are likely.
- Long Entry: Only above 24,900 with a target of 25,100.
- Short Entry: Below 24,600 with a target of 24,400.
- Risk Management: Reduce position sizes by 50% to avoid stop-loss triggers in a volatile market.
For Positional Investors
The market is currently in a "prove-it" mode.
- Defensive Stance: Since the index is below the 200-day moving average, assume a bearish bias until 25,200 is reclaimed.
- Accumulation: Use sharp dips toward 24,500 - 24,400 to buy quality large-caps in the defense and pharma sectors.
Options Strategy
- Bearish View: Consider a Bear Put Spread (Buy 24,700 PE, Sell 24,500 PE).
- Neutral View: An Iron Condor (selling OTM calls and puts with hedges) may work if the market consolidates between 24,600 and 25,200.
Key Takeaways
- Volatility Peak: The India VIX at 15.10 suggests that price swings will be wider than usual.
- Technical Breakdown: Nifty closing below 24,900 and its 200-day SMA is a major red flag for bulls.
- STT Shock: The brokerage and exchange sector faces a structural headwind that may lead to a permanent shift in trading volumes.
- Budget Winners: Defense (BEL/HAL) and Infrastructure (RVNL) remain the most viable sectors for long-term accumulation.
- Global Context: Negative US futures and mixed Asian cues provide no immediate support for a domestic gap-up.
What This Means for Investors
The current market environment is characterized by policy-induced uncertainty. While the Budget has laid a strong foundation for long-term infrastructure and defense growth, the immediate taxation changes on derivatives have dampened short-term sentiment. Investors should monitor the 24,500 level closely; a breach here could lead to a deeper correction toward 24,000. Conversely, reclaiming 25,200 is essential for any sustainable bullish reversal.