Indian Stock Market Shows Caution Ahead of Union Budget 2026 Announcement
The Indian equity markets are displaying nervous trading patterns in the final sessions leading up to the highly anticipated Union Budget 2026, with investors adopting a wait-and-watch approach amid prevailing global risk aversion. Market participants appear hesitant to take significant positions before Finance Minister Nirmala Sitharaman presents the budget on February 1, which is expected to establish the economic direction for the coming fiscal year.
January Performance Reflects Multiple Headwinds
January has proven challenging for bullish investors as several factors have constrained market gains. The stalled India-US trade negotiations, persistent foreign portfolio investor outflows, weakness in the Indian rupee, and lackluster corporate earnings growth have collectively dampened sentiment. Reflecting this pressure, the benchmark Nifty 50 index has declined by 3.33% during the month, highlighting the cautious environment prevailing in domestic markets.
Moderate Expectations from Budget 2026
Investor expectations from the upcoming budget remain deliberately tempered as policymakers navigate the delicate balance between growth imperatives and fiscal prudence amidst global economic uncertainties. Domestic brokerage firm Motilal Oswal observes that with limited anticipation for major announcements, even selective policy measures could positively influence market sentiment.
The brokerage identifies potential focus areas including substantial capital expenditure in defense, infrastructure development, affordable housing initiatives, and capital goods sectors. Additionally, the budget might introduce capital market measures designed to reassure investors and procedural reforms aimed at enhancing ease of living and business operations.
Technical Analysts Identify Promising Budget Stocks
For investors seeking to capitalize on Budget Day opportunities, technical analysts have identified five stocks demonstrating favorable setups ahead of the announcements. With markets scheduled to open on Sunday, February 1, these recommendations come from experts at SBI Securities and Choice Broking.
SBI Securities Recommendations
Power Finance Corporation (PFC)
The Nifty PSE Index approaches a significant breakout threshold, buoyed by improving sentiment before Union Budget 2026, which historically generates substantial interest in public sector enterprises. PFC has emerged as a particularly promising candidate within this context. After moving within a falling channel since early January, indicating consolidation and temporary supply pressure, the stock has decisively broken out from this pattern accompanied by substantial volume expansion, signaling fresh institutional and retail buying interest.
Momentum indicators reinforce this bullish outlook. The Relative Strength Index has convincingly crossed above the 60 level, suggesting renewed bullish momentum. Technical confirmation emerges from the Average Directional Index, where the DI+ crossing above DI- indicates strengthening trend force favoring bulls. Given this confluence of breakout structure, volume expansion, and improving momentum, the outlook remains positive.
- Buying Range: ₹385–380
- Target Price: ₹420
- Stop Loss: ₹365
Coal India
Coal India continues demonstrating robust technical strength following its breakout above the previous swing high on January 2. Subsequently, the stock entered a healthy consolidation phase, trading within a well-defined range of ₹412–442 across multiple sessions. This rangebound movement allowed digestion of earlier gains and absorption of supply. Currently, Coal India has broken out from this consolidation band again, supported by noticeable volume increases over recent trading sessions, indicating revival of aggressive buying demand.
Momentum indicators show substantial improvement, with the RSI surging from 52 to 69 within just five sessions, highlighting accelerating bullish momentum. The Bollinger Bands midline provided dependable support during consolidation, confirming underlying strength where fresh buying emerged. The combination of price action, improved trend structure, and strong momentum signals suggests continued upward movement in the short term.
- Buying Range: ₹450–445
- Target Price: ₹500
- Stop Loss: ₹430
Choice Broking Recommendations
Titan Company
Titan currently trades around ₹3,975.20 while maintaining a strong bullish structure in the longer-term trend, characterized by consistent higher high–higher low formations reflecting sustained strength and trend continuity. Recently, the stock delivered a decisive, wider-range horizontal breakout supported by healthy volumes, indicating strong institutional participation and confirming breakout validity.
Post-breakout, Titan is undergoing a healthy retracement toward the breakout support zone, closely aligned with the 20-week Exponential Moving Average, highlighting constructive pullback rather than trend reversal. This price behavior suggests strong demand emerging at lower levels and reinforces medium- to long-term bullish outlook. On weekly charts, the stock trades comfortably above its 20-, 50-, 100-, and 200-week EMAs, all sloping upward, underscoring prevailing trend strength.
Momentum indicators support positive bias, with weekly RSI at 58.25 sustaining above its support zone and trending upward, signaling improving momentum without entering overbought territory.
- Buying Price: ₹3,975.20
- Target Price: ₹4,500
- Stop Loss: ₹3,700
Garden Reach Shipbuilders & Engineers (GRSE)
GRSE currently trades around ₹2,518.70 while maintaining positive long-term structure characterized by consistent higher high–higher low formations indicating intact primary uptrend. Recently, the stock witnessed healthy retracement, successfully finding support near the 0.50 Fibonacci retracement level aligned with the 50-week EMA. This confluence support has acted as a strong demand zone, from where the stock is now moving higher, indicating renewed buying interest and strengthening bullish sentiment.
From broader technical perspective, GRSE trades firmly above its 20-, 50-, 100-, and 200-week EMAs on weekly charts, all positively aligned, underscoring prevailing trend strength. Momentum indicators support constructive outlook, with weekly RSI at 51 taking support near lower levels and turning upward, suggesting gradual momentum pickup without overbought conditions.
- Buying Price: ₹2,518.70
- Target Price: ₹2,900
- Stop Loss: ₹2,325
Grasim Industries
Grasim currently trades around ₹2,839.10 while exhibiting positive long-term structure characterized by higher high–higher low formations indicating intact primary uptrend. In the near term, the stock is consolidating in sideways range formation, but importantly, this consolidation occurs within a rising trend supported by consistently upward-sloping 50-week EMA acting as dynamic support and reflecting sustained institutional demand.
From broader technical perspective, Grasim trades comfortably above its 20-, 50-, 100-, and 200-week EMAs on weekly charts, all positively aligned, reinforcing prevailing trend strength. Momentum indicators remain constructive, with weekly RSI at 54.55 taking support near lower levels and stabilizing, suggesting improving momentum and favorable risk-reward setup without overbought conditions.
- Buying Price: ₹2,839.10
- Target Price: ₹3,225
- Stop Loss: ₹2,650
Disclaimer: This analysis serves educational purposes only. The views and recommendations expressed belong to individual analysts or broking firms. Investors should consult certified experts before making investment decisions.
