On the 30-share Sensex, Tata Steel, Infosys, Eternal, Tech Mahindra and Bajaj Finserv led the declines, falling between 1% and 2% in early trade.Metal stocks bore the brunt of the selling, with the sector index plunging 4.4%, monitoring a decline in global metal prices as the US dollar firmed, and profit-taking followed a recent rally.
Broader markets also weakened, with the small-cap and mid-cap indices down 1.5% and 0.8% respectively. The bond and currency markets were closed for the session.
Expert views
Investors have no expectations of major tax cuts in this budget as the 2025 budget has delivered huge income tax cuts, said Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments. He added that an adjustment in certain taxes is likely and if there was an increase in the long-term capital gains tax exemption from Rs 1.25 lakhs currently to a higher limit, it would be a positive development.
“From the market perspective, a fiscally prudent, growth-oriented budget is desirable. There are rumors of long-term capital gains tax exemption for certain categories of FIIs. If this happens, it could trigger a rally in the market,” Vijayakumar said, adding that higher allocation to defense is a given and hence defense stocks will continue to be the focus.
“An important part of the budget could be exports, especially industrial exports which the Economic Survey has hammered on. Hence, export segments are likely to be on the radar of investors,” Vijayakumar said, adding that announcements related to PSU-bank mergers; Disinvestments in PSUs will be closely watched.
Apart from the Budget, the crash in precious metals prices could bring investors back into equities, Vijayakumar said.
Global markets
Global stocks fell for a second straight session on Friday, while the US dollar rose sharply after President Trump named former Federal Reserve Governor Kevin Warsh as his pick to lead the central bank. The move, combined with warmer-than-expected inflation, made investors already wary of the policy outlook.
US stocks ended the week mixed. The S&P 500 gained 0.3%, its first weekly gain in three weeks, while the Dow Jones Industrial Average fell 0.4% and the Nasdaq Composite fell 0.2%. This month, the S&P 500 rose 1.4%, the Dow Jones rose 1.7% and the Nasdaq gained 0.9%.
MSCI’s global stock index fell 0.69% on the day to 1,042.93, but remained on track for a weekly rise and the strongest monthly percentage gain since September. In Europe, the Stoxx Europe 600 closed 0.64% higher.
Spot silver fell 27.66% to $84 an ounce, marking the steepest single-day decline in data going back to at least 1982.
FII/DII tracker
On the institutional front, foreign institutional investors (FIIs) bought shares worth a little over Rs 2,251 crore on January 30, while domestic institutional investors (DIIs) were net sellers at Rs 601 crore.
Rough impact
Oil prices fell slightly on Friday, offsetting modest gains but still remaining near six-month highs, as lingering tensions between the US and Iran continued to support the market.
Brent crude futures settled at $70.69 a barrel, down 2 cents or 0.03%, with the March contract expiring later in the session. U.S. benchmark West Texas Intermediate fell 21 cents, or 0.32%, to $65.21 a barrel.
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