Markets open flat ahead of Union Budget as volatility eases

The domestic equity market opened flat on Thursday as investors adopted a wait-and-watch approach ahead of the upcoming Union Budget this weekend, with market volatility showing signs of easing.

The benchmark Nifty 50 index opened at 25,345, registering a marginal gain of 2.25 points, or 0.01 per cent. Meanwhile, the BSE Sensex began the session at 82,368.96, up 24.28 points, or 0.03 per cent.

Market participants remained cautious as they positioned themselves ahead of the Budget announcement, with indicators pointing to a stable yet guarded sentiment.

Ajay Bagga, Banking and Market Expert, said, “Volatility is cooling, with the India VIX settling near 13.5–14, while the Nifty PCR (Put-Call Ratio) stands at a balanced 0.70. This indicates cautious but stable positioning ahead of the Union Budget 2026. Investors are closely watching the February 1 announcement, with expectations of a 4.2 per cent fiscal deficit target, continued infrastructure CAPEX, and potential AI-focused incentives.”

He further added, “Currencies, oil, and metals are the key themes today. US dollar movements are influencing policymakers’ outlooks, oil prices are surging due to the high probability of a joint Israeli-US attack on Iran, and metals are witnessing a bumper year.”

In the broader market on the National Stock Exchange (NSE), indices showed mixed trends. The Nifty 100 slipped 0.19 per cent, while the Nifty Midcap 100 edged up 0.10 per cent. The Nifty Smallcap index outperformed, gaining 0.51 per cent.

Most sectoral indices on the NSE opened in the red, except for Nifty Metal and PSU Bank. The Nifty Auto index declined 0.70 per cent, Nifty FMCG fell 0.54 per cent, and Nifty IT was down 0.95 per cent in early trade.

Global markets reflected a mix of caution and resilience following the first US Federal Reserve meeting of the year. The Fed kept interest rates unchanged at 3.5–3.75 per cent and signalled a data-dependent approach, as inflation remains sticky.

In the US, the S&P 500 briefly crossed the historic 7,000 mark before closing flat, while the Nasdaq gained 0.17 per cent, supported by strong buying in AI chip stocks.

Commodities remained in focus, with gold hitting a record high and nearing USD 5,600 per ounce in some markets amid safe-haven demand and a weakening US dollar. Oil prices also climbed to a four-month high, with Brent settling near USD 68.40 per barrel, driven by rising geopolitical tensions in the Middle East and a surprise drawdown in US inventories.

Asian markets showed mixed trends. Japan’s Nikkei 225 opened marginally higher by 0.03 per cent, Hong Kong’s Hang Seng index rose 0.6 per cent, South Korea’s KOSPI gained 0.98 per cent, while Taiwan’s weighted index declined 0.48 per cent.