Indian Stock Market Braces for Volatile Start Amid Budget 2026 Fallout
The Indian stock market is poised to commence Monday's trading session on a cautiously optimistic note, striving to rebound from the severe sell-off witnessed in recent sessions. However, market analysts anticipate that volatility will remain elevated as investors continue to meticulously evaluate the implications of the Union Budget 2026-27 proposals. The broader sentiment remains fragile, with participants recalibrating their strategies in response to new fiscal measures.
Global Cues and Domestic Pressures Weigh on Sentiment
Asian markets presented a mixed picture during early trading hours, while US equities concluded the previous session on a lower trajectory. US stock futures also indicated a downward trend, adding to the global uncertainty. This external backdrop, combined with domestic fiscal developments, is likely to influence trading patterns on the Indian bourses throughout the day.
Ponmudi R, CEO of Enrich Money, provided insights into the current market dynamics: "Indian markets may remain under pressure following the sharp negative reaction to the Union Budget 2026–27, which was triggered by an unexpected increase in the Securities Transaction Tax on derivatives. While domestic institutional investor buying could offer some cushion, near-term sentiment remains cautious to mildly bearish. Market participants are reassessing their positions in anticipation of higher futures and options costs, set to take effect from April 1. The long-term growth narrative for India remains robust, but short-term volatility and correction risks are likely to persist until stability is restored."
Special Session Sees Sharp Decline Post-Budget Announcement
The Indian equity market experienced a significant downturn during a special trading session held on Sunday, immediately after the Budget announcement. The proposal to hike the Securities Transaction Tax on futures and options trades sent shockwaves through the market. The benchmark indices recorded substantial losses:
- The Sensex plummeted by 1,546.84 points, or 1.88%, closing at 80,722.94.
- The Nifty 50 index fell by 495.20 points, or 1.96%, settling at 24,825.45.
This dramatic decline underscores the immediate market apprehension regarding the increased transaction costs, which could dampen trading activity, particularly in the derivatives segment.
Stocks to Watch in Today's Volatile Trading Environment
Against this backdrop of heightened volatility and Budget-induced recalibration, several stocks are likely to attract significant investor attention and could experience notable price movements during Monday's session.
Companies Declaring Quarterly Results
Shares of Hyundai Motor, Indus Towers, Bajaj Housing Finance, RailTel Corporation, Tata Chemicals, and Awfis Space Solutions will be in focus as these companies are scheduled to announce their Q3 financial results today. Investor scrutiny will be high, with performance metrics likely to drive individual stock trajectories.
Hero MotoCorp Reports Strong Sales Growth
Two-wheeler manufacturing giant Hero MotoCorp reported a robust 26% year-on-year increase in dealer dispatches for January 2026. The company dispatched 5,57,871 units, up from 4,42,873 units in the same month last year. This positive operational update may provide some support to the stock amid broader market weakness.
Adani Green Energy Issues Clarification
Adani Green Energy released a fresh clarification over the weekend regarding a civil case filed by the US Securities and Exchange Commission against its directors, Gautam Adani and Sagar Adani, in a US federal court. The company reiterated that it is not named in the legal proceedings and that no charges have been levied against the corporate entity itself.
ITC Faces Excise Duty Impact
ITC shares will be monitored closely as cigarette prices have risen sharply across various segments. This follows the implementation of a new excise duty, which came into effect on Sunday. Retail prices have increased by at least ₹22 to ₹25 per pack of ten sticks, potentially affecting volume sales and profitability.
Defence Stocks in Spotlight Post-Budget
Shares of defence public sector undertakings, including Bharat Electronics Limited, Hindustan Aeronautics Limited, Garden Reach Shipbuilders & Engineers, and Data Patterns, are likely to remain in the limelight. The Union Budget set the capital expenditure allocation for FY27 at ₹2.19 lakh crore, marking an approximate 18% increase from the revised FY26 estimate of ₹1.86 lakh crore. This enhanced allocation could benefit companies in the defence manufacturing sector.
Biopharma Sector Gains Strategic Focus
The biopharma space, including stocks like Biocon, Sun Pharmaceutical Industries, and Dr. Reddy's Laboratories, is set to stay under the radar. Finance Minister Nirmala Sitharaman, in her Budget speech, highlighted biologics as critical to longevity and outlined the government's plan to position India as a global biopharma manufacturing hub. This strategic focus, supported by plans to create a dedicated biopharma network, could have long-term positive implications for the sector.
BSE and Groww React to STT Hike
Shares of BSE and Groww declined by 5% to 10% during Sunday's special session. The decline was directly attributed to Budget 2026's proposal to increase the Securities Transaction Tax on futures and options. Brokerage firm Jefferies described this step as negative for overall market sentiment, as it raises transaction costs for key market participants.
Quess Corp Receives Tax Demand
Quess Corp disclosed that it has received a final assessment order from the Income Tax Department, resulting in a tax demand of ₹160 crore. This development could impact the company's financials and investor perception.
Blue Star Reports Data Security Incident
Blue Star stated that it identified unauthorised access to its product installation data. The company promptly took steps to limit access as soon as the issue was discovered. Such cybersecurity incidents are increasingly scrutinised by investors.
MOIL Approves New Joint Venture
MOIL's board has approved the establishment of a joint venture with the Madhya Pradesh State Mining Corporation. This JV will focus on manganese ore mining operations in Madhya Pradesh, potentially expanding the company's resource base and operational footprint.
Disclaimer: This market analysis is for educational purposes only. Investors are advised to consult with a qualified investment advisor before making any financial decisions.
