From Budget Fears to Trade Deal Cheers

The domestic equity market remained in a wait-andwatch mode over the past fortnight, as investors stayed cautious ahead of key Budget announcements that were expected to provide fresh directional cues. Market sentiment remained fragile, with equities witnessing a sharp rise in volatility. The Nifty VIX, a key gauge of investor fear, surged nearly 20 per cent during the period, underscoring heightened uncertainty and risk aversion. Both benchmark indices, the BSE Sensex and the Nifty 50, extended their downward trend, ending the period with losses of around 1.5 per cent each.[EasyDNNnews:PaidContentStart]

The broader market bore the brunt of the sell-off, as the BSE Mid-Cap and BSE Small-Cap indices slipped below crucial technical support levels, triggering further nervousness among investors. On the sectoral front, the sell-off was largely broad-based, with most sectoral indices trading in the red. Power, metals, and oil and gas emerged as notable exceptions, displaying relative resilience amid an otherwise weak market environment.

Metals initially rallied as base metal prices stayed firm on strong demand and speculative flows, but experienced a sharp late-period correction due to aggressive profit booking, rising margin requirements, a stronger U.S. dollar, and shifting monetary policy expectations. Precious metals like gold and silver plunged sharply after record highs as leveraged positions were unwound.

Indian markets were on a roller-coaster over the fortnight, with Budget caution, profit booking in metals and realty, mixed Q3 earnings, and foreign outflows, before a US-India trade deal sparked a late rally.

The BSE Realty index emerged as the worst performer during the fortnight, slumping more than 8 per cent due to heavy profit booking, concerns over stretched valuations, and rising sensitivity to interest rates.Broader market risk aversion ahead of the Union Budget and foreign selling in cyclical stocks further weighed on Real Estate shares. On the institutional front, foreign investors remained net sellers, with outflows of around ₹15,400 crore during the period. Domestic institutional investors, however, continued to provide strong support to the market, recording inflows of more than ₹35,000 crore. The Q3FY26 earnings season has been largely lacklustre so far, with around 60 per cent of India Inc reporting positive profit growth, while the remaining 40 per cent posted declines.

Aggregate revenue growth hovered around 11-12 per cent, whereas EBITDA growth remained muted, confined to single-digit levels. In other developments, the National Stock Exchange (NSE) has finally received SEBI’s long-pending approval to proceed with its highly anticipated IPO, ending nearly a decade of regulatory delays. Just as this fortnight drew to a close, the markets delivered a flurry of high-impact developments, from crucial Budget Day announcements and a sharp sell-off triggered by the government’s hike in derivatives STT to a landmark US-India trade deal that fuelled a strong market rebound. We unpack these twists and their investment implications in the upcoming issue. Stay tuned!

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