Markets likely to make cautious start ahead of Budget 2026

Indian equity benchmarks are likely to get a cautious start ahead of the Budget 2026 proposals during a special trading session coupled with weakness on Wall Street Friday overnight. Finance Minister Nirmala Sitharaman will present her record ninth straight Budget today, and all eyes will be on the much-awaited customs reforms.

Some of the key factors to be watched: 

India may achieve $2 trillion exports target by 2032: Commerce and Industry Minister Piyush Goyal said that the target of taking India's goods and services exports to $2 trillion is likely to be achieved around 2032, instead of the earlier goal of 2030, due to global uncertainties. 

India sees Arab world as gateway to Europe, Africa, Latin America: Minister of State for External Affairs Kirti Vardhan Singh said that India views the Arab countries as strategic hubs to extend its economic outreach to Europe, Africa and Latin America.

India US working towards closing trade deal quickly: Commerce and Industry Minister Piyush Goyal said that the negotiations for a proposed bilateral trade agreement between India and the US are progressing, and both countries are working to close the deal quickly.

India’s fiscal deficit at 54.5% in December: The government data showed the Centre's fiscal deficit at the end of December stood at Rs 8.55 lakh crore, or 54.5 per cent of the annual budget target for 2025-26, compared to 56.7 per cent in the year-ago period. 

Sugar stocks will be in limelight: Indian Sugar & Bio-energy Manufacturers Association (ISMA) said that India's sugar production rose 18.35 per cent to 19.50 million tonne till January 31 of the ongoing 2025-26 season on higher output in key states.

On the global front: The US markets ended lower on Friday on renewed concerns about inflation after the Labor Department released a report showing producer prices increased by much more than expected in the month of December. Asian markets settled mostly lower on Friday tracking Wall Street’s slight weakness as investors digested the latest US earnings reports, with Apple warning that rising costs are squeezing margins.

Back home, snapping a three-day winning streak, Indian equity benchmarks ended lower on Friday dragged by metal, Basic Materials stocks and caution ahead of the Budget presentation on February 1. Fresh foreign fund outflows and weakness in the rupee also added to the bearish trend in the equity markets. Finally, the BSE Sensex fell 296.59 points or 0.36% to 82,269.78 and the CNX Nifty was down by 98.25 points or 0.39% to 25,320.65.

Some of the important factors in trade:

Infra projects see cost overrun of Rs 5.42 lakh crore in December: A monthly government report said several infrastructure projects worth above Rs 150 crore each registered a cumulative cost overrun of Rs 5.42 lakh crore.

India receives unexpectedly trade benefit in Turkey through EU FTA: The Global Trade Research Initiative (GTRI) has said that India unexpectedly gained a small bonus from its free trade (FTA) agreement with the European Union (EU), as Indian goods can enter Turkiye with duty concessions, while Turkish products are not able to use the pact to export to India.

India must focus more on opportunities instead of tariffs amid geopolitical tensions: World Bank Group President Ajay Banga has said that India should ‘think less’ about tariffs and focus more on opportunities, amid concerns over global trade due to geopolitical tensions.