Budget Jitters Hit Dalal Street: Sensex Falls Over 600 Points, Nifty Slips Sharply: Why Stock Market Is Down?

The equity market slid sharply on Friday as benchmark indices booked major losses just two days before the Union Budget 2026, as deepening caution among traders could be seen amid persistent foreign selling, currency weakness and global uncertainties.

The BSE Sensex dipped intraday over 600 points, while the Nifty 50 hovered near key support levels, one of the steepest pre-budget drops. Market participants have been gradually lowering positions, which led to today's broad-based selloff across sectors, particularly in metal and IT stocks, as the market is currently looking forward to Sunday's Budget announcement.

At the Opening Bell Today, the Sensex tumbled 619.06 points to 81,947.31, while the Nifty 50 slipped 171.35 points to 25,247.55. However, the indices recovered partially as around 11:30 am, the Sensex was trading at 82,048.43, down 517.94 points or 0.63%, while the Nifty 50 fell 173 points or 0.68% to 25,245.70.

Why Is the Stock Market Falling Today?

Yesterday, the Finance Ministry released the Economic Survey of India 2026, which quoted promising outlook in terms of growth. According to the Survey, India's domestic growth outlook was raised to 7% from its earlier estimate of 6.5%.
Despite that the stock market is under pressure as it seems investors are currently more focused on near-term risks rather than long-term optimism.

Budget 2026 Overhang Keeps Investors Cautious

One of the major factors dragging the market lower today is the uncertainty ahead of the Union Budget 2026, scheduled for Sunday. Markets will operate in a special trading session, and investors are avoiding aggressive bets until there is clarity on fiscal policy, taxation and government spending priorities.

"As we near Budget Day there are headwinds and tailwinds for the market. Geopolitical issues continue to plague global trade with continuous threats of tariff weaponisation by Trump. The spike in Brent crude to near $ 70 is a headwind for Indian macros in general and industries that use oil as inputs, in particular. However, these headwinds are likely to be countered by the positive message from the Economic Survey that projects GDP growth of 6.8 to 7.2% growth in FY 27. With 3.5% headline inflation, India is headed for around 10% nominal GDP growth in FY27. This has the potential to deliver 15 to 17% earnings growth in FY 27, imparting resilience to the market." said Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Investments Limited.

FII Selling Adds Pressure

One of the key reasons behind Friday's fall is continued foreign selling, as overseas investors remain cautious amid global uncertainties.

"On January 29, foreign institutional investors sold equities worth Rs 393 crore, while domestic institutional investors bought shares worth Rs 2,638 crore. Given persistent global uncertainties, traders are advised to remain selective and disciplined, focusing on fundamentally strong stocks during declines. Fresh long positions should be considered only after a confirmed and sustained breakout above the 25,700 level on the Nifty." said Hitesh Tailor, Research Analyst, Choice Equity Broking Private Limited.

Rupee Continues Its Decline

A depreciating rupee has added to the pressure, making investors nervous about capital flows and inflation risks. On Friday Morning, the rupee opened at 91.9125 against the US dollar. The currency hit an all-time low of 91.9850 on Thursday, which weighed heavily on equity markets.

Global Cues Offer Mixed Support

Globally, Asian markets traded higher on Friday, after US President Donald Trump announced he would reveal his choice for the next Federal Reserve chair later today. While global cues were mildly supportive, domestic concerns continued to dominate Indian market sentiment.

Nifty Outlook Today

According to Nirmal Bang Securities, the Nifty is expected to remain range-bound during the day.
"On technical grounds, Nifty has an immediate support at 25,340. If Nifty closes below this level, further downside can be expected towards 25,270-25,200. On the upside, 25,600-25,670 will act as strong resistance levels," the brokerage said.

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