Budget 2026 Jitters Grip Dalal Street as Markets Remain Under Pressure

Indian equity markets remained under pressure on Friday, extending a cautious trend on Dalal Street ahead of the Union Budget 2026. Benchmark indices opened on a weak note, reflecting both global market softness and growing investor nervousness over policy cues expected from the government in the coming days.

The Nifty 50 slipped sharply at the open, while the Sensex also traded lower. The subdued opening followed a brief rebound earlier in the week and highlighted the fragile sentiment prevailing across global equity markets.

Market participants attributed the weakness largely to global cues. Technology-heavy indices across the world have come under sustained selling pressure, dragging emerging markets like India along with them. Asian markets traded broadly lower in early sessions, mirroring weakness on Wall Street, particularly in US technology stocks.

Geopolitical risks have added another layer of uncertainty. Rising concerns over a possible escalation in tensions involving the US and Iran have spooked investors, raising fears of a wider regional conflict. This has pushed crude oil prices higher and strengthened the US dollar — both negative factors for Indian markets.

The surge in Brent crude towards the $70-per-barrel mark has emerged as a key headwind for India’s macroeconomic outlook. Higher oil prices increase import costs, worsen the current account balance and can fuel inflationary pressures, prompting investors to adopt a defensive stance ahead of major policy announcements.

Sectorally, the impact of tariff-related fears has been most visible in export-oriented stocks. The Nifty IT has borne the brunt of the selling, slumping nearly 8 per cent over the week and extending its one-year losses to around 20 per cent. Pharma stocks have also faced pressure, reflecting concerns over potential trade disruptions and regulatory uncertainties in key overseas markets.

Despite the near-term volatility, analysts point out that India’s broader growth fundamentals remain resilient. The Economic Survey has projected GDP growth of 6.8 to 7.2 per cent in FY27, with headline inflation expected to remain contained. This combination could translate into strong nominal GDP growth and support corporate earnings over the medium term.

On the technical front, the Nifty has been consolidating within a narrow range, holding above a key support zone near its 200-day exponential moving average. Buyers have continued to emerge on declines, but meaningful upside is capped until there is clarity from the Budget.

Foreign portfolio investor outflows, which had weighed heavily on sentiment earlier, have shown early signs of moderation. Analysts believe this could indicate a shift in strategy as investors wait to assess fiscal priorities, capital expenditure plans and reform measures outlined in the Budget.

For now, markets are expected to remain range-bound and event-driven. Any positive surprises on infrastructure spending, fiscal discipline or growth-supportive measures could revive interest in cyclical stocks. Conversely, disappointment on key expectations may prolong consolidation and keep risk appetite muted in the near term.