Reliance leads partial recovery in Indian stocks from budget day selloff

FE Team | Published: February 02, 2026 22:50:47

India's equity benchmarks advanced on Monday, led by gains in infrastructure stocks and bargain hunting in heavyweight Reliance Industries, as markets partially recovered from damage taken after the federal budget, reports Reuters.
The Nifty 50 rose 1.06 per cent to 25,088.4, while the BSE Sensex added 1.17 per cent to 81,666.46. Intraday, the indexes swung between gains of 1.3 per cent and losses of 0.6 per cent.
The benchmark indexes fell about 2 per cent on Sunday, marking their biggest budget-day percentage drop in six years, settling at the lowest levels seen since November.
"We see limited downside risk (for Nifty) after a 2 per cent drop on Sunday," said analysts led by Seshadri Sen of Emkay Global Financial Services.
The budget continued to prioritise infrastructure and manufacturing while maintaining fiscal discipline, making Sunday's reaction a knee-jerk response, according to three analysts.
Sunday's sell-off was triggered by the proposal to hike the securities transaction tax on derivatives, higher-than-expected gross borrowing for fiscal year 2027 and the absence of cuts in capital gains tax or measures to attract foreign inflows.
"The impact on large institutional hedging strategies due to STT hike is likely to be limited," said Anand Gupta, lead portfolio manager of Indian equities at Allianz Global Investors.
"Historically, marginal increases in STT have not had a material impact on market participation, liquidity or hedging activity," he said.
Fourteen of the 16 major sectors logged gains on the day. The broader small-caps and mid-caps rose 0.6 per cent and 1 per cent, respectively.
Oil-to-telecom conglomerate Reliance Industries jumped 3.2 per cent making it the biggest contributor to benchmark gains. The move marked a recovery from a 3.5 per cent drop on budget day.
Traders piled into infrastructure major Larsen & Toubro's shares, which rose 2.8 per cent, boosted by the budget's focus on capital expenditure.
Shriram Finance declined 3.2 per cent, emerging as biggest loser on the Nifty 50 index on concerns that higher borrowing by the government would raise its funding costs.