In the week ended on Friday, 06 February 2025, the S&P BSE Sensex jumped 1,310.62 points or 1.59% to settle at 83,580.40. The Nifty 50 index rallied 373.05 points or 1.47% to settle at 25,693.70. The BSE 150 Mid-Cap index fell 0.11% to close at 16,065.48. The BSE 250 Small-Cap index declined 0.42% to close at 6,311.44.

Weekly Index Movement:

The benchmark equity indices witnessed a sharp sell-off during the special trading session on Sunday following the presentation of the Union Budget 2026 by Finance Minister Nirmala Sitharaman. The S&P BSE Sensex tumbled 1,546 points or 1.88% to 80,722.94. The Nifty 50 index dropped 495.20 points or 1.96% to 24,825.45.

Equity benchmarks staged a sharp comeback on Monday, breaking a two-session slide as investors weighed the union budget's implications for market sentiment and capital flows. The S&P BSE Sensex zoomed 943.52 points or 1.17% to 81,666.46. The Nifty 50 index jumped 262.95 points or 1.06% to 25,088.40. In the past two consecutive trading sessions, the Sensex declined 0.73% while the Nifty fell 0.91%.

The key equity benchmarks ended sharply higher on Tuesday, rising for a second straight session on strong buying interest. The S&P BSE Sensex zoomed 2,072.67 points or 2.54% to 83,739.13. The Nifty 50 index added 639.15 points or 2.55% to 25,727.55. In two consecutive trading sessions, the Sensex added 3.74% while the Nifty gained 3.63%.

The key equity benchmarks eked out modest gains Wednesday, extending their rally to a third straight session. Sentiment remained supported by the landmark India-US trade agreement. The S&P BSE Sensex added 78.56 points or 0.09% to 83,817.69. The Nifty 50 index rose 48.45 points or 0.19% to 25,776. In three consecutive trading sessions, the Sensex added 3.83% while the Nifty jumped 3.82%.

The key equity benchmarks closed deep in the red on Thursday, breaking a three-day winning streak as investors locked in profits at stretched valuations. The S&P BSE Sensex slumped 503.76 points or 0.60% to 83,313.93. The Nifty 50 index fell 133.20 points or 0.52% to 25,642.80. Over the past three consecutive trading sessions, the Sensex advanced 3.20%, while the Nifty gained 3.29%.

The key equity benchmarks ended with minor gains on Friday. The S&P BSE Sensex added 266.47 points or 0.32% to 83,580.40. The Nifty 50 index rose 50.90 points or 0.20% to 25,693.70.

Union Budget 2026:

Union Finance Minister Nirmala Sitharaman used the Union Budget 2026 to underline a reform-heavy path built around fiscal consolidation, job creation and sharper global competitiveness. The Centre reiterated its medium-term debt sustainability goal, with the FRBM roadmap indicating a steady decline in the debt-to-GDP ratio and projecting central government debt at around 55.6% in BE 2026-27 versus 56.1% in RE 2025-26, framing the glide towards a sub 50% target by 2030 as a policy anchor rather than a hard statutory number. On the deficit side, the government stuck to its consolidation track, with the fiscal gap seen at 4.4% of GDP in RE FY26 and budgeted to narrow to 4.3% in BE FY27, a sequence that keeps the post pandemic promises on course while still giving room for capex-driven growth.

On the expenditure and borrowing front, the Budget raised capital expenditure to about Rs 12.2 lakh crore for FY27, signalling another year of heavy public investment in infrastructure, especially in emerging tier 2 and tier 3 growth centres that are starting to look more like mini metros than satellite towns. To fund the gap, the Centre plans net market borrowing of Rs 11.54 lakh crore through dated securities, with the balance coming from small savings and other sources, in line with the glide path indicated in the Budget 2025 26 speech. That combination—slower deficit, still high capex and a calibrated borrowing programme—is meant to keep bond yields contained while nudging the baton from public to private capex over the medium term.

Markets, however, zeroed in on the tax tweaks. On the indirect side, the Finance Bill, 2026 sharply increased the Securities Transaction Tax (STT) on derivatives: STT on futures goes up from 0.02% to 0.05% of the traded value, while STT on options rises from 0.10% to 0.15% of the premium (and from 0.125% to 0.15% when options are exercised). That makes high-churn F&O strategies more expensive at the margin and nudges some speculative volume off the table, even as it modestly boosts revenue. On the direct tax side, the Income-tax Act, 2025 is slated to take full effect from 1 April 2026, with fresh slab structures, harmonised surcharge rules and a cleaned up TDS/TCS and penalty framework, all aimed at reducing litigation and making the law more “plain English” for taxpayers.

The Budget also delivered compliance relief via Tax Collected at Source (TCS) rationalisation under the LRS and travel bucket. TCS on overseas tour packages has been pared down to a flat 2%, replacing the earlier structure that included higher 5–20% slabs and thresholds. Similarly, TCS on remittances under the Liberalised Remittance Scheme for education and medical treatment drops to 2% from 5%, with a higher trigger threshold, easing the cash flow pinch on families sending children abroad or paying for medical procedures. Alongside, the Bill tightens the architecture for revised and updated returns—allowing revised returns up to the end of the assessment year (or 12 months in the new Act), with a modest fee if filed late—while keeping the extended “updated return” window of up to four years, albeit at a steep additional tax to discourage strategic under reporting.

For cross border and enforcement issues, the Budget has carved out a targeted Foreign Assets of Small Taxpayers Disclosure Scheme, 2026. The scheme ring fences smaller cases—undisclosed foreign assets and income up to defined ceilings—into a one time, time bound window where taxpayers can come clean by paying 30% tax plus a 100% penalty on that tax on previously untaxed foreign assets or income, or a flat Rs 1 lakh fee in benign cases where foreign assets bought out of already taxed income were not reported in the foreign asset schedule. In return, declarants get immunity from further tax, penalty and prosecution under the Black Money Act on the declared items. The exact opening and closing dates will be notified separately, but the policy signal is clear: clean up small legacy foreign asset issues before the information exchange net tightens further.

On the business tax side, several structural tweaks stand out. First, supply of manpower is now explicitly included in the statutory definition of “work” for TDS purposes, putting manpower contracts clearly under the contractor TDS net at the familiar 1%-2% slabs depending on the payer’s status. Second, the Minimum Alternate Tax (MAT) regime has been recalibrated. To encourage companies to shift to the new regime, set-off of brought forward MAT credit to be allowed to companies only in the new regime. Set-off using available MAT credit to be allowed to an extent of 1/4th of the tax liability in the new regime. MAT is proposed to be made final tax. There will be no further credit accumulation from 1st April 2026. The rate of final tax to be reduced to 14% from the current MAT rate of 15%. The brought forward MAT credit of taxpayers accumulated till 31st March 2026, will continue to be available to them for set-off as above.

For non-resident and digital economy players, the government has doubled down on India as a data and cloud hub. Any foreign company that provides cloud services to customers globally by using data centre services from India to be provided Tax holiday till 2047. A safe harbour of 15% on cost to be provided if the company providing data centre services from India is a related entity.

A safe harbour to non-residents for component warehousing in a bonded warehouse at a profit margin of 2% of the invoice value. The resultant tax of about 0.7 percent will be much lower than in competing jurisdictions. Exemption from income tax for 5 years to be provided to any non-resident who provides capital goods, equipment or tooling, to any toll manufacturer in a bonded zone. Exemption to global (non-India sourced) income of a non-resident expert, for a stay period of 5 years under notified schemes. Exemption from Minimum Alternate Tax (MAT) to all non-residents who pay tax on presumptive basis.

The Budget also rationalises a few smaller but high friction levies. On the collection side, TCS rate for sellers of specific goods namely alcoholic liquor, scrap and minerals will be rationalized to 2% and that on tendu leaves will be reduced from 5% to 2%. On capital markets, the long criticised buyback tax is being redesigned. Buyback for all types of shareholders to be taxed as capital gains. Promoters to pay an additional buyback tax, making effective tax 22% for corporate promoters and 30% for non-corporate promoters.

Beyond taxes, the Budget leans hard into manufacturing, logistics and services as growth engines. Customs schedules have been overhauled to remove rate clutter, cut or eliminate basic customs duty on a basket of critical minerals and components for electronics, clean tech, batteries, telecom and shipping, and amend rates for shipbuilding, airports and select agri linked products, all with an eye on domestic value addition and supply chain resilience. Infrastructure plans—from PPP pipelines, a new asset monetisation plan and multimodal connectivity under PM Gati Shakti to continued support for Jal Jeevan, urban challenge funds and maritime corridors—are meant to keep the public investment cycle humming even as the deficit comes down. On the services and social side, the government has layered in measures such as a fresh Rs 10,000 crore fund of funds for startups, expanded skilling and research allocations, and sector specific pushes in tourism, medical tourism and urban livelihoods, framing the entire package as an attempt to deliver both hard infrastructure growth and more inclusive, employment rich development.

India-US Trade Deal:

India and the United States on Monday announced a landmark trade deal following a phone call between Prime Minister Narendra Modi and U.S. President Donald Trump, marking a clear thaw in bilateral ties after months of tariff-related tensions.

Under the agreement, Washington will cut tariffs on Indian goods to 18% from 25% and scrap the additional 25% penalty imposed earlier over India’s purchases of Russian crude oil. Trump said New Delhi had agreed to stop buying Russian oil and would move to reduce tariffs and non-tariff barriers on U.S. goods to zero.

The deal is seen as a major boost to trade relations between the two countries, which are targeting bilateral trade of $500 billion by 2030. Market participants expect the agreement to lift sentiment for Indian equities and the rupee, while export-oriented sectors such as textiles, apparel and seafood are likely to be key beneficiaries.

Modi welcomed the announcement, saying reduced tariffs on Made in India products would unlock immense opportunities for mutually beneficial cooperation between the world’s two largest democracies. Commerce and Industry Minister Piyush Goyal called the pact a historic turning point, saying it would open new opportunities for farmers, MSMEs, entrepreneurs and skilled workers, while accelerating India’s progress towards Viksit Bharat 2047.

RBI MPC:

The Reserve Bank of India’s (RBI’s) Monetary Policy Committee (MPC) held its first monetary policy review of the calendar year 2026. RBI governor Sanjay Malhotra kept the key policy rate—repo rate—unchanged at 5.25%. Headline inflation during November and December remained below the tolerance band of the inflation target. The revised outlook for CPI inflation in Q1 and Q2 of next year, at 4% and 4.2%, respectively, is revised slightly upwards, said RBI governor Sanjay Malhotra. The Indian economy continues on a steady, improving trajectory, with real GDP poised to register significant higher growth of 7.4% this year, as compared to the previous year, amidst global headwinds, the governor noted. Going forward, economic activity is expected to hold up well in the next year, he added.

Economy:

India’s manufacturing activity recovered in January after losing momentum in December, though business confidence weakened. The HSBC India Manufacturing Purchasing Managers’ Index (PMI) rose to 55.4 in January from a two-year low of 55.0 in December, remaining well above the 50-mark that separates expansion from contraction.

The seasonally adjusted HSBC India Services PMI rose to 58.5 in January from 58.0 in December. The flash score was 59.3. A score above 50.0 indicates expansion.

The composite output index rose to 58.4 in January from December's 11-month low of 57.8, indicating that the latest sharp rate of expansion in the Indian private sector was boosted by stronger growth at goods producers as well as service providers.

Stocks in Spotlight:

Bajaj Auto fell 0.68%. The company’s standalone net profit increased 18.68% to Rs 2,502.81 crore on 18.84% jump in revenue from operations to Rs 15,220.33 crore in Q3 FY26 over Q3 FY25.

Tata Motors Passenger Vehicles rose 5.7%. The company reported a consolidated net loss of Rs 3,486 crore in Q3 FY26 compared with a net profit of Rs 5,406 crore in Q3 FY25. Revenue from operations fell 25.81% YoY to Rs 69,605 crore during the quarter.

Bajaj Finance jumped 5.49%. The company reported a 6% decline in consolidated net profit to Rs 3,977.85 crore despite 17.63% jump in total revenue from operations to Rs 21,213.89 crore in Q3 FY26 over Q3 FY25.

Bharti Airtel rose 3.57%. The company reported a 55.14% decline in consolidated net profit to Rs 6,630.5 crore, despite a 19.62% jump in revenue from operations to Rs 53,981.6 crore in Q3 FY26 over Q3 FY25.

Data Patterns (India) rallied 1.96%. The company’s standalone net profit jumped 30.54% to Rs 58.30 crore on a 47.92% surge in revenue from operations to Rs 173.13 crore in Q3 FY26, compared with Q3 FY25.

Hitachi Energy India surged 16.27%. The company’s standalone net profit soared 90.29% to Rs 261.42 crore on 27.71% increase in revenue from operations to Rs 2021.31 crore in Q3 FY26 over Q3 FY25.

Tata Power Company shed 0.23%. The company’s consolidated net profit fell 25.1% to Rs 771.98 crore on 9.37% fall in revenue from operations to Rs 13,948.41 crore in Q3 FY26 over Q3 FY25.

One Mobikwik Systems surged 10.48%. The company reported a profitable December quarter, driven by strong execution across its payments and financial services businesses and sharp operating discipline. On a consolidated basis, Mobikwik posted a net profit of Rs 4.05 crore in Q3 December 2025, reversing a loss of Rs 55.28 crore in Q3 December 2024 and a loss of Rs 28.62 crore in Q2 September 2025. Total income rose 8.29% YoY and 6.40% QoQ to Rs 297.22 crore in the December 2025 quarter.

Ather Energy surged 13.61%. The company delivered its strongest-ever quarter performance, with robust growth in market share and revenue alongside a sharp narrowing of EBITDA losses. On a standalone basis, the company reported a net loss of Rs 84.60 crore in Q3 December 2025, narrowing sharply from a loss of Rs 197.80 crore in Q3 December 2024 and lower than the Rs 154.10 crore loss in Q2 September 2025.

Bajaj Housing Finance rose 0.48%. The company’s standalone net profit jumped 21.32% to Rs 664.89 crore on a 17.8% increase in total income to Rs 2,886.04 crore in Q3 FY26 over Q3 FY25.

Gokaldas Exports surged 41.82%. The company reported 70.97% fall in consolidated net profit to Rs 14.61 crore in Q3 FY26 from Rs 50.34 crore in Q3 FY25. Revenue from operations shed 0.92% year-over-year (YoY) to Rs 978.65 crore during the quarter.

Global Markets:

The German retail sales rose 0.1% month-on-month in December, reversing a 0.5% decline in the previous month.

Euro zone inflation cooled to 1.7% in January, flash data from statistics agency Eurostat showed Wednesday. Core inflation, which excludes more volatile energy, food, alcohol and tobacco prices, stood at 2.2% in January, a touch down from the 2.3% seen in the year to December.

The key inflation rate has now dipped below the European Central Bank’s 2% target. It’s likely to steer clear of any more rate cuts for the foreseeable future.

The RatingDog China General Manufacturing PMI, compiled by S&P Global, edged up to 50.3 in January from 50.1 in December. Since readings above 50 signal expansion and those below indicate contraction, the latest print points to a modest improvement. It was also the strongest showing since October, when the index stood at 50.6.

ADP on Wednesday released its monthly look at private payroll growth for January, which showed an increase of just 22,000 on the month after a downwardly revised 37,000 increase in December.