Highlights: Markets end higher after choppy session: Nifty closes above 25,000, Sensex jumps 940 points

The domestic equity markets closed the volatile trade of Monday on a higher note. The Nifty 50 ended 263 points or 1.06% higher at 25,088.40, while the BSE Sensex finished 944 points or 1.17% higher at 81,666.

Auto stocks are on a roll after the monthly sales data came out. The Nifty Auto was trading 1.23% higher today, February 02. The Nifty Auto rose the highest among the sectoral indices. Tata Motors PV was the highest gainer among the auto stocks, rising 4.60%. The counter was followed by Bharat Forge, M&M, Uno Minda, Hero MotoCorp, Ashok Leyland, and other auto stocks.

"The Union Budget reflects a forward-looking approach to sustaining India’s growth trajectory, with capital expenditure positioned as a long-term productivity driver. MSMEs continue to anchor employment and local economic activity, supported by measures that have strengthened credit access and operational viability. The calibrated focus across sectors such as pharmaceuticals, logistics, infrastructure, healthcare, and renewable energy highlights the importance of strong enabling ecosystems for competitive growth," said Rajiv Sabharwal MD and CEO of Tata Capital.

"Markets have been spooked by the lack of any direct announcements, unlike last year, an increase in STT rates on F&O and dashed hopes of LTCG reduction for FII’s. However, we believe that the Budget carries forward the focus on Infra, Renewables, defence, Logistics Clusters, Tourism, Value Added Farming, Data Centres, etc., which will help the economy sustain strong growth momentum. We believe a bottom-up approach will be a better way to play the current uncertainty. We remain constructive on Banks, NBFC, Automobiles, select staples, Jewellery, select durables, Hospitals, Defence, Ports and telecom stocks," said Amnish Aggarwal, Director of Institutional Research at PL Capital.

Overall, the Budget prioritised productivity-led growth with fiscal discipline, infrastructure expansion, supply-side reforms, and strategic sector support amid global uncertainties, focusing on long-term investment over short-term relief, said Ajay Menon, MD & CEO of Wealth Management at Motilal Oswal Financial Services.

"Going ahead, we expect the market to remain subdued in the near term amid weak investor sentiments, though attention is likely to shift from headline announcements to the Budget’s fine print. This, along with the upcoming earnings announcements and global market cues would lay a key role in shaping market direction," he added.

Motilal Oswal’s top five Nifty 50 ideas are State Bank of India, Titan, Mahindra & Mahindra, Infosys, and Eternal (Zomato), as weakness persists and India underperforms global markets. The Nifty is trading at a 12-month forward RoE (return on equity) of 14.9%, above its long-term average. In P/E terms, the MSCI India Index is trading at a 29% premium to the MSCI EM Index, below its historical average premium of 77%.

"In the Union Budget 2026-27 budget was aligned with expectations, signalling the government’s confidence in the structural resilience of equity markets. A primary policy shift was a sharp increase in STT on derivatives—futures rose by 150% (to 0.05%) & options by 50% (to 0.15%)—aimed at curbing short-term speculation while maintaining existing rates for cash equities. However, empirical evidence suggests a limited impact on market activity. We maintain a negative outlook for the next 12–18 months, driven by a broad-based growth slowdown that is leading to rising market concentration," said Ambit Capital in a research note.

In a post on a social media platform X (formerly Twitter) said that the rupee will not see a free fall just because STT was increased on F&O. Also, FPIs are not going to sell more just because of this. However, he acknowledged that there is an opportunity lost to attract Foreign Capital. "Many Sectors are doing well. Stock markets will stabilise sooner than later," he said.

"The budget speech mentioned 'semiconductors' early on, signalling a major pivot in the government’s view of what India should pursue. A likely boost to capex, services sector growth and AI, along with slightly slower than expected fiscal consolidation, will likely support FY27 earnings, further helped by increased demand for equities through buybacks. We are Overweight Financials, Consumer Discretionary and Industrials," said Morgan Stanley on Indian equities.

"Yesterday’s market selloff resulting in 495 point crash in Nifty was a knee jerk reaction to the sharp increase in STT on F&O trades. This was not a revenue raising measure, but a decision to discourage retail traders from complex F&O trading, in which 92% of them were losing money. This decision is in the interest of retail investors. But this decision impacted the market sentiments, which were already impacted by the decision to make no changes in the LTCGs tax, which a section of the market was expecting rather unrealistically," said VK Vijayakumar, Chief Investment Strategist of Geojit Investments.

"Capital goods manufacturing is identified as a cross-sector productivity enabler. A new scheme will support manufacturing of construction and infrastructure equipment, while a Container Manufacturing Scheme is proposed with a budgetary allocation of Rs 10,000 crore over five years," said Mirae Asset Sharekhan in a note post budget.