Why Sensex, Nifty fell today ahead of Budget 2026? Key reasons explained

Stock market fall ahead of Budget 2026

Stock markets in India fell in trade on Friday, January 30, as investors resorted to profit booking ahead of the presentation of the Union Budget on February 1, 2026. That apart, tepid global cues, a rise in crude oil prices, and sustained selling of Indian shares by foreign investors put pressure on the markets.

 

Stock markets will remain open on Sunday, February 1, as the government is scheduled to present the Budget for 2026-27 (FY27) that day.

Stock market crash today, Jan 30

The BSE Sensex index fell 625.34 points (0.7 per cent) today, to an intraday low of 81,941.03. Similarly, the Nifty50 index today dropped 200 points (0.7 per cent) to a low of 25,218.95. 

At close, the Nifty50 shut shop 0.39 per cent or 98.25 points lower at 25,320.65, and the BSE Sensex settled 0.36 per cent or 296.59 points down at 82,269.78.  

In the broader markets, the Nifty MidCap index nursed losses of 0.19 per cent, but the Nifty SmallCap index ended 0.32 per cent higher.

India VIX rises on Friday

A day ahead of the Budget 2026 presentation, NSE's volatility index -- India VIX -- settled higher, suggesting heightened investor caution in the market. The index hit an intraday high of 14.04, rising 5 per cent, before closing 1.9 per cent up at 13.63 level.

Why are markets falling today? Reasons behind Sensex, Nifty crash today

Nervousness ahead of Union Budget 2026

Stock market investors traded with caution ahead of the presentation of the Union Budget on Feb 1 as markets navigate multiple headwinds and tailwinds. 

Geopolitical issues have hit global trade amid threats of tariff weaponization by US President Donald Trump. 

Back home, the Centre's gross fiscal deficit as a percentage of budget estimate was higher for the April to November period. Additionally, there was a decline in tax revenue for the period. 

Given this, analysts expect Budget 2026 to have fewer populist announcements given the limited fiscal room with the government. 

"The pace of fiscal consolidation in FY27 is likely to be limited with the gross central fiscal deficit likely to be set at around 4.2-4.3 per cent of the GDP. The assumptions around tax collections could also be conservative in FY27, with nominal GDP growth likely to be set around 10 per cent (in-line with pickup in inflation along with a lagged impact of monetary easing aiding growth conditions)," noted  Naval Kagalwala, COO & Head of Products, Shriram Wealth Ltd.

Asia markets, US futures fall

Asia-Pacific markets witnessed broad-based profit booking on Friday. Hong Kong's Hang Seng led the fall with a 2-per cent decline, followed by losses in Shanghai Stock Exchange (1 per cent), Australia's ASX200 (0.65 per cent), and Japan's Nikkei 225 (0.10 per cent).

 

Futures tied to US indices were also witnessing pressure in the pre-market session. Dow Jones futures were down 331 points (0.67 per cent), S&P500 futures fell 0.7 per cent, and Nasdaq Composite futures declined 0.87 per cent.

 

Global market analysts have attributed the nervousness in the global markets to the impending announcement of a new US Federal Reserve Chair by President Donald Trump.

 

Yesterday, Trump said he would announce his nominee to replace incumbent Federal Reserve Chair Jerome Powell. Former Fed Governor Kevin Warsh, BlackRock’s fixed income chief Rick Rieder, and National Economic Council director Kevin Hassett are likely in contention.

Continuous selling by FPIs 

Foreign portfolio investors (FPIs) continue to remain cautious on Indian equities amid concerns over a delayed earnings recovery, sustained depreciation of the Indian rupee, and elevated valuations. Analysts tracking overseas investor sentiment say Indian stocks are currently "not a compelling buy" for global funds.  Christopher Wood, global head of equity strategy at Jefferies, for instance, has cut his exposure to Indian equities by 2 percentage points (ppt) to 13 per cent in his Asia Pacific ex-Japan portfolio. Besides, UBS and Bernstein, too, remain cautious on Indian stocks.   FPIs sold Indian equities worth nearly $18.9 billion (₹1.66 trillion) in 2025, and have sold equities worth $3.97 billion (₹35,890 crore) in January 2026.

 

Metal, IT shares under pressure

Shares of metal and information technology (IT) companies faced heavy selling pressure on Friday. The Nifty Metal index crashed 5 per cent intraday to a low of 11,855.85 on the National Stock Exchange (NSE), while the Nifty IT fell 1.8 per cent to 37,704.35.  The indices ended 5.2 per cent and 1..03 per cent lower, respectively.

 

Within the metal space, Hindustan Copper stock tanked 11 per cent, National Aluminium (NAalco) fell 10 per cent, Vedanta (8 per cent), Hindustan Zinc (7 per cent), Hindalco Industries (6.5 per cent), and NMDC (6 per cent).

 

Meanwhile, in the IT sector, Infosys, Tech M, HCL Tech, Oracle Financial, and Wipro declined in the range of 1-2 per cent.  

 

Globally exposed sectors -- metals and IT -- dropped amid reports that Trump may nominate hawkish Kevin Warsh as the Federal Reserve chair.

 

For metals, specifically, the decline follows a sharp plunge in precious metal prices overnight after a record run. Gold and silver prices fell up to 8 per cent Thursday night as the US dollar strengthened.

 

Separately, a Bloomberg report said that the London Metal Exchange began trading after a one-hour delay on Friday after a technical problem, causing confusion among traders.

Increase in oil prices

Oil prices rose to their highest since July on Thursday as looming Iran concerns and a fall in US oil inventories lent support.

 

Brent crude ‌futures rose over 4 per cent in two days, taking the oil futures to near $70 per barrel-mark.

 

Both crude benchmarks -- Brent and WTI -- are heading for their first monthly gains in six months, with Brent up 14.7 per cent, marking its sharpest monthly rise since January 2022, according to Reuters. WTI has surged around 12 per cent in January, its biggest monthly increase since July 2023.

 

Rising oil prices act as a headwind for the Indian economy, in general, and for industries that use oil as inputs