Indian equity benchmarks are expected to open lower as investors assess the implications of the Union Budget 2025 and the first phase of import tariffs imposed by the Trump administration in the US. The swift response from affected nations has raised concerns about an imminent trade war. Investors will also keep an eye on the manufacturing PMI data set to be released later today.

Key Market Factors:

India’s Strong Economic Fundamentals: Finance Minister Nirmala Sitharaman dismissed concerns over the Indian rupee’s decline, stating that it has depreciated only against a strengthening US dollar while remaining stable against other currencies due to strong macroeconomic fundamentals.

GST Collection Rises 12% to RS 1.96 Lakh Crore in January: Government data revealed that gross GST revenue grew by 12.3% to RS 1.96 lakh crore in January, driven by increased domestic economic activity.

New Tax Structure to Benefit 5.65 Crore Taxpayers: A report by the State Bank of India (SBI) highlighted that the new tax regime announced in Union Budget 2025-26 is expected to benefit around 5.65 crore taxpayers earning RS 4 lakh and above.

Budget Proposals to Re-Energize Economy: The Federation of Indian Chambers of Commerce and Industry (FICCI) welcomed the Union Budget 2025-26, stating that it effectively addresses immediate economic challenges while maintaining a long-term vision for "Viksit Bharat."

Sugar Sector in Focus: A private report suggested that India's sugar production could see a significant decline in the 2025 season, with estimates suggesting a drop below 27 million metric tons (MMT), down from 31.8 MMT last year.

Global Market Trends:

Asian markets traded in the red on Monday after US President Donald Trump’s tariffs on Canada, Mexico, and China fueled fears of a global trade war and potential economic slowdown.

Indian Equity Market Performance:

Indian markets saw fluctuations during the special session for the Union Budget but ultimately closed flat on Saturday. The BSE Sensex gained 5.39 points or 0.01% to close at 77,505.96, while the NSE Nifty declined by 26.25 points or 0.11% to settle at 23,482.15.

Major Market Developments:

Govt Allocates RS 11.21 Lakh Crore for Capex in FY26: After missing its target for the current financial year, the government has proposed RS 11.21 lakh crore for capital expenditure in FY26. However, the capex target for FY25 is likely to fall short by around RS 93,000 crore.

Investors Await RBI MPC Meeting: The Reserve Bank of India (RBI) is expected to cut its main policy rate on February 7, followed by one more potential rate cut in the next quarter.

Core Infrastructure Sector Growth Slows to 4% in December 2024: The output of eight key infrastructure sectors slowed to 4% in December 2024, compared to 5.1% growth recorded a year earlier.