Budget 2025 | D-Street experts suggest trading strategy for Feb 1, reveal Nifty 50 key levels: Top sector picks | Stock Market News

Budget 2025: The general market has shown tentative signs of relief following the Reserve Bank of India’s announcement to purchase G-sec securities worth ₹60,000 crore through open market operations in three tranches. This move is anticipated to improve liquidity in the equity segment. Currently, the market remains in an extremely oversold state, especially after the panic observed on January 27th. Approximately 90% of NSE-listed stocks are trading below key moving averages such as the 10, 20, and 50 DMA, indicating that the near-term incentive for adding short positions is relatively low. It is important to acknowledge the potential for high volatility in the current market environment. With events such as the Union Budget on the horizon, there is a considerable likelihood that volatility may increase further. Therefore, it is advisable to take a prudent approach and implement disciplined risk management strategies when engaging with the markets on February 1.

What are the key levels for Sensex to watch out for

It is important to note that the benchmark indices continue to operate within a no-trade zone, with immediate support near 75265 and resistance near 77340 in the Sensex. A decisive close above 76740 is expected to reduce the likelihood of further drawdowns in the intermediate trend. Additionally, a close above 77340 would likely bolster bullish sentiment and enable the index to test the upper resistance level of 79200.

The Nifty index remains in a no-trade zone, with immediate support located around 22800 and resistance near 23420. A decisive close above 23050 is anticipated to decrease the chances of further drawdowns in the intermediate trend. Furthermore, a close above 23420 could strengthen bullish sentiment, allowing the index to challenge the 50 DMA, which is acting as overhead resistance near 23820.

Technical Trading Strategy

If the scenario unfolds in Sensex ahead of the budget day, we recommend that investors consider initiating hedged long positions on the budget day after 12 PM, provided that the intraday momentum favours buyers. It is advisable to set a strict stop loss near 76000 and aim for a target price of 79200, followed by 79500.

Sonam Srivastava, Founder and Fund Manager at Wright Research PMS

The upcoming budget is expected to focus on welfare measures, agriculture, and infrastructure development, alongside a continued push for manufacturing under the PLI (Production Linked Incentive) scheme. Sectors such as agriculture, agrochemicals, infrastructure, and capital goods could see significant benefits. Additionally, renewable energy and healthcare may also gain attention as part of broader structural reforms.

Investors can position themselves by looking at quality stocks in these sectors, particularly companies with strong fundamentals that are well-aligned with government policies. Agriculture-focused funds, infrastructure ETFs, or stocks of leading players in agrochemicals and capital goods could offer opportunities. Additionally, staying diversified across these themes while monitoring the budget announcements can help investors capitalize effectively.

Budget announcements often lead to heightened volatility due to speculation and knee-jerk market reactions. Investors can protect themselves by maintaining a balanced portfolio with exposure to diversified equity, debt instruments, and gold. Holding cash reserves for post-budget opportunities and avoiding speculative trades in the run-up to the announcement is advisable.

Gold and short-duration debt funds are likely to offer the best risk-adjusted returns in the pre-budget phase, as they provide stability amid uncertainty. Post-budget, once clarity emerges, investors can reposition towards equity themes aligned with the announced policies.

A focus on fiscal consolidation could limit government spending, impacting growth expectations in consumption-driven sectors. However, prudent fiscal measures may lead to a stable macroeconomic environment, benefiting banking and NBFCs through improved credit quality and lower systemic risks.

Consumption-driven industries may face a temporary slowdown if there are fewer direct stimulus measures, but a focus on rural welfare and income-boosting schemes could offset some of this pressure. Long-term investors in these sectors should focus on companies with strong balance sheets and resilient business models.