Indian Stock Market Preview: February 3, 2026

Introduction

The Indian equity markets are standing at a critical juncture this Tuesday, February 3, 2026. Following a resilient 1% rally on Monday that saw the Nifty 50 reclaim the psychological 25,000 mark, the stage is now set for an explosive start. Global cues have aligned in favor of the bulls, with GIFT Nifty futures indicating a massive gap-up opening that could redefine near-term market structures.

However, this surge comes during a high-stakes trading session. Not only is it the Nifty weekly options expiry, but the market is also entering the densest part of the Q3 FY26 earnings season with over 70 companies scheduled to report results. Investors are also keeping a close eye on the upcoming RBI Monetary Policy Committee (MPC) meeting starting tomorrow, which adds a layer of macro-economic anticipation to the intraday volatility.

Global Market Cues: Strong Tailwinds from Wall Street

US Markets Rally Back

US indices delivered a stellar performance on Monday, February 2, providing the necessary momentum for Asian peers. The sentiment shifted positively as investors looked past recent turbulence in commodities and AI-related tech stocks.

• Dow Jones Industrial Average: Surged 515 points, a gain of 1.10%.
• S&P 500: Advanced 0.50% to close at 6,976.44, hovering just below its all-time record of 6,978.60.
• Nasdaq Composite: Climbed 0.60%, successfully recovering from earlier technology sector concerns.

GIFT Nifty: The 800-Point Signal

The most striking data point for domestic investors is the performance of the GIFT Nifty (formerly SGX Nifty). It serves as a lead indicator for the NSE Nifty 50 opening.

At current levels, GIFT Nifty is trading approximately 768 points above the previous spot close, suggesting a gap-up of 700 to 800 points when the Indian bell rings at 9:15 AM.

Commodities and Currency: Macro Relief

• Crude Oil: Prices tumbled significantly on February 2. WTI Crude fell over 4.70% to approximately $62 per barrel. For India, a major oil importer, this reduction helps contain the current account deficit and eases inflationary pressure on logistics and aviation sectors.
• Indian Rupee (INR): The currency showed notable resilience, with the USD/INR pair declining to 91.64 from a previous high of 91.98. A strengthening rupee typically attracts Foreign Portfolio Investment (FPI) and lowers costs for firms with dollar-denominated debt.

Domestic Market Overview: Post-Budget Momentum

Monday's Recovery Recap

Markets began the week on a strong footing as infrastructure and heavyweights like Reliance Industries led the charge. The Sensex surged 1.17% to reach 81,666.46, while the Bank Nifty managed a modest gain of 0.35% to end at 58,619.00.

Institutional Flow: The Tug of War

The battle between Foreign Institutional Investors (FIIs) and Domestic Institutional Investors (DIIs) remains the central theme of 2026. While FIIs have been persistent sellers, DIIs have acted as a formidable cushion.

Institutional Activity (February 2, 2026):

Historical data suggests this selling is part of a larger trend; FIIs sold a staggering ₹38,740 crore in January 2026 alone. However, the domestic liquidity remains robust enough to absorb these outflows.

Technical Analysis: Key Levels for February 3

Nifty 50 Technical Outlook

The Nifty 50 has recently shown a bearish structure by breaking the previous swing low of 24,919, but today's gap-up could invalidate that weakness if certain levels are held.

Key Resistance Zones:

1. 25,210: This is the 200-Day Moving Average (200-DMA) and is considered the "line in the sand." A decisive close above this is required for a trend reversal.
2. 25,400 - 25,500: Significant hurdles where call writers are heavily concentrated.
3. 25,600: The extended target for the current bullish impulse.

Key Support Zones:

1. 25,200: Immediate support post gap-up.
2. 25,000: A vital psychological floor.
3. 24,800 - 24,680: Strong demand zone that must hold to prevent deeper corrections.

Bank Nifty Technical Setup

Bank Nifty is showing better relative strength compared to the headline index, holding its 100-Day Moving Average at the 58,000 level.

• Immediate Resistance: 59,400 (Max Pain level) and 60,000 (Psychological barrier).
• Major Support: 58,500 and the 58,000 mark (100-DMA).
• Upside Target: A move above 60,500 would signal entry into record-high territory.

Options Market Intelligence

Put-Call Ratio (PCR) and Max Pain data provide a roadmap for today's weekly expiry:

• Max Pain Level: 25,050
• PCR: 0.59 (Indicates call writers are currently in control, suggesting a bearish-to-neutral bias unless the gap-up forces a short-covering rally).
• OI Concentration: Max Call OI at 25,500 - 25,600; Max Put OI at 25,000 - 25,200.

Earnings Season: 70+ Companies Reporting Q3 Results

Stock-specific action will be intense today. The following companies are high-priority for any watchlist:

1. Bajaj Finance: The market will dissect Asset Under Management (AUM) growth and Net Interest Margins (NIM) for signs of credit stress.
2. Adani Enterprises & Adani Ports: These flagship entities will set the tone for the entire Adani ecosystem. Watch for updates on new energy and cargo volumes.
3. Varun Beverages: Investors are looking for volume growth and rural demand recovery signals.
4. Mankind Pharma: Focus remains on domestic formulations and margin expansion.
5. Pidilite Industries: A key proxy for the health of the real estate and construction sectors.
6. Other Notables: NMDC (iron ore realizations), Indus Towers (5G rollout benefits), and Nazara Technologies.

Stocks to Watch: Recommendations & Analysis

Technical & Fundamental Picks

• ICICI Bank (CMP: ₹1,334): Target price of ₹1,750 (31% upside). Data suggests a best-in-class Return on Assets (RoA) of ~2.2% for FY26. It remains a top pick for its superior operating metrics.
• APL Apollo Tubes (CMP: ₹2,047): Target price of ₹2,350 (15% upside). The company has shown robust volume traction and benefits from a dual-brand premium strategy.

Sectoral Opportunities

• Defense: BEL (Bharat Electronics) continues to benefit from a massive government order book.
• Infrastructure: L&T remains the primary beneficiary of post-budget infrastructure spending.
• IT Services: TCS is viewed as a defensive play with stable dividend payouts.
• Renewable Energy: Tata Power and Adani Green are central to the energy transition theme.

Key Events and Economic Calendar

Ongoing Budget Impact: The market is still adjusting to the STT hike on derivatives. Futures STT rose to 0.05% (from 0.02%), and Options STT rose to 0.15%. This may lead to a gradual volume shift toward the cash market.

Trading Strategy for February 3, 2026

Opening Phase (9:15 AM - 10:00 AM)

• Expect the Gap: Anticipate a 700-800 point jump. Avoid aggressive buying in the first 30 minutes.
• Profit Booking: Consider booking partial profits on existing long positions near the 25,200 - 25,300 zone.

Mid-Session Phase (10:00 AM - 2:00 PM)

• The 200-DMA Rule: If Nifty stays above 25,210, look for buying opportunities on dips toward 25,150.
• Bank Nifty Focus: Look for a buy zone between 59,000 - 59,500 with a target of 60,000.

Expiry Management (2:00 PM - 3:30 PM)

• Volatility Warning: Square off weekly options by 2:30 PM to avoid "theta decay" and wild swings.
• Max Pain Pull: Be aware that the index may gravitate toward 25,050 if the gap-up euphoria fades.

Risk Management Rules

1. Position Sizing: Reduce size by 30-40% due to the overlap of expiry and earnings.
2. Stop Losses: Use strict system-based stops; do not average down on losing trades.
3. Hedging: Use Out-of-the-Money (OTM) puts to protect overnight long positions.

Key Takeaways

• GIFT Nifty at 25,857 (+2.87%) signals a massive opening for Indian indices.
• Crude Oil drop to $62 provides a significant tailwind for the domestic economy.
• 200-DMA (25,210) is the most critical technical level for Nifty 50 today.
• Bajaj Finance and Adani Group earnings are the primary stock-specific catalysts.
• RBI MPC anticipation (Feb 4-6) could sustain interest in banking and rate-sensitive stocks.

What This Means for Investors

Historical trends indicate that while gap-up openings are exciting, they often invite profit booking from institutional players, especially FIIs who have been net sellers. Retail investors should view this surge as a test of market strength. If the Nifty holds above the 200-DMA for more than two consecutive sessions, it could signal the end of the recent bearish phase.

Investors may consider monitoring the Bank Nifty for relative outperformance, as private banks show stronger momentum ahead of the potential RBI rate cut. Use the current volatility to accumulate high-quality stocks like ICICI Bank or L&T on dips rather than chasing peaks. Stay disciplined, manage your leverage, and focus on earnings quality.