Sensex recovers 1,279 pts from day's low; check key reasons for the rally

Indian equity benchmark indices, Sensex and Nifty, witnessed a sharp rally on Monday, February 2, 2026, as investors digested the Budget proposals, including the STT hike on derivatives.

 

The BSE Sensex rallied over 1,345 points from its intraday low of 80,387.25 hit a high of 81,732.25. The NSE Nifty50 reclaimed the 25,000 mark in the intraday to hit a high of 25,108.10, up nearly 428 points from day's low of 24,679.40.

  The rebound came after a sharp-sell off witnessed during the special trading session on Sunday, February 1, 2026 as Finance Minister Nirmala Sitharaman presented the Budget 2026. Alongside other key measures, FM also announced an increase in Securities Transactions Tax (STT) on futures to 0.05 per cent from 0.02 per cent earlier, while the levy on options premium has been raised to 0.15 per cent from 0.10 per cent. 

 

 

The BSE Sensex closed at 81,666.46 levels, up 943.52 points or 1.1 per cent, while the NSE Nifty50 index was up 262.95 points or 1.06 per cent at 25,088.40 levels.

 

In the broader market, the NSE MidCap 100 index was up 0.96 per cent, and the Nifty SmallCap 100 index rose 0.84 per cent. 

 

Following a muted start, majority of the sectoral indices recovered to trade higher. The Nifty Auto and Oil & Gas indices rose over 2 per cent each. Nifty Metal, FMCG, and Realty also gained over 1 per cent each.

Here are the key reasons behind the market rally today:

Budget in-line with market expectations: Sunny Agrawal, head of fundamental research at SBI Securities, said the Budget 2025 was largely in line with the expectations. "The only announcement that was completely out of the syllabus was the increase in STT on futures and options, particularly on futures. However, the market seems to have digested that development now," he said.

 

Agrawal further added that the impact of higher STT is largely on futures traders, as the incremental cost of trading futures has gone up significantly. In contrast, the increase in cost for options trading is minuscule, around ₹4–5 per lot. Since most retail investors are predominantly on the buy side in options, this cost increase is unlikely to hamper trading volumes.

 

Falling commodity prices: Another factor adding comfort is the sharp correction in crude oil prices amid de-escalation between the US and Iran. Alongside, global commodity prices have cooled off slightly. Last check, crude oil benchmark WTI Crude was trading 5.26 per cent lower at $61.85 per barrel.  Gold and silver prices also extended the sharp declines, both globally and in India, as a strengthening US dollar and profit-taking at record highs weighed on investor sentiment. 

 

"Earlier concerns around rising commodity prices impacting margins of sectors such as wires and cables, autos, and other heavy users of copper and aluminium have eased. If commodity prices sustain at lower levels, margin pressure concerns could further reduce,” Agrawal said.

 

Expectation of India-US trade deal: Recently, the US offered Venezuela crude to India as an alternative, and if India takes that deal, it could address US tariff concerns.  On Saturday, Union Commerce and Industry Minister Piyush Goyal said that negotiations for a proposed bilateral trade agreement between India and the United States are progressing, and both countries are working to close the deal soon. He further added that "good news" on this front will be announced in the near future.