Budget day blues: Nifty 50 and Sensex close in the red, PSU banks surge amid capex boost

On Thursday, February 1, the domestic stock markets witnessed a decline as Finance Minister Nirmala Sitharaman presented the Interim Budget 2024 for the upcoming financial year (FY25). The Nifty 50 and Sensex both closed in the red, responding to the fiscal measures outlined in the budget.

The Budget, in line with expectations, emphasized fiscal consolidation, infrastructure development, agriculture, green growth, and railways. Analysts praised the government's fiscal prudence, deeming it positive for both the economy and the stock market.

Despite the overall positive sentiment, market experts noted a potential disappointment due to lower-than-expected infrastructure spending. The Nifty 50 experienced a dip of 67 points, reaching an intraday low of 21,658, ultimately closing 28 points lower at 21,697, reflecting a 0.13% decrease. Similarly, the Sensex dropped 177 points to touch an intraday low of 71,574, concluding 107 points lower at 71,645.30, marking a 0.15% decline.

Mid and small-cap stocks underperformed, with the BSE Midcap index falling by 0.40% and the Smallcap index witnessing a 0.22% decline.

Global market sentiment also played a role in the downturn, influenced by weak cues from international markets. Following substantial losses on Wall Street the previous night, major European markets were also in the red at the time of the Sensex closing. The Bank of England's upcoming interest rate decision further added to the cautious market environment.

On the global front, the US Federal Reserve opted to maintain interest rates, adhering to expectations. However, the lack of clear signals on the timeline for rate reduction left investors uncertain about future developments. The combination of domestic fiscal measures and global economic concerns contributed to the day's market fluctuations.