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Indian equity benchmarks are likely to make gap-down opening as investors weigh the implications of the Union Budget 2025 alongside the impact of first leg of import tariffs imposed by the Trump administration in the US. The response from affected nations was swift, opening the doors for an imminent trade war. Investors will be looking ahead to the manufacturing PMI data to be out later in the day.

Some of the key factors to be watched:

India macro fundamentals strong: Finance Minister Nirmala Sitharaman rejected criticism over the slide of the Indian rupee, saying it has depreciated only against a strengthening US dollar but remained stable against all other currencies because of the strong macroeconomic fundamentals.

GST mop-up rises 12% to Rs 1.96 lakh crore in January: Government data showed gross GST revenue rose 12.3 per cent to Rs 1.96 lakh crore in January on higher domestic economic activity.

New tax structure to benefit 5.65 crore taxpayers: A report by the State Bank of India (SBI) noted that the new tax structure announced in the Union Budget 2025-26 is expected to benefit around 5.65 crore taxpayers who fall under the income slab of Rs 4 lakh and above.

Budget proposals will re-energize economy: The Federation of Indian Chambers of Commerce and Industry (FICCI) has welcomed the Union Budget 2025-26, stating that it effectively addresses immediate economic challenges while keeping a firm focus on the long-term vision of Viksit Bharat.

Sugar sector stocks will be in focus: A private report noted that sugar production in India is expected to face a significant decline in the 2025 season, with forecasts predicting a drop to below 27 million metric tons (MMT), down from 31.8 MMT in the previous year.

On the global front: Asian markets are trading in red on Monday after U.S. President Donald Trump’s tariffs on Canada, Mexico, and China triggered fears of a broad trade war and hit to global growth.

Back home, Indian equity benchmarks altered between gains and losses in a special session for the Union Budget and ended flat on Saturday, even as Finance Minister Nirmala Sitharaman announced a major boost to spur consumption. Finally, the BSE Sensex rose 5.39 points or 0.01% to 77,505.96, and the CNX Nifty was down by 26.25 points or 0.11% to 23,482.15.

Some of the important factors for the markets:

Govt allocates Rs 11.21 lakh crore for capex in FY26: Having missed the target for the current financial year, the government proposed to spend Rs 11.21 lakh crore towards capex for FY26. However, the capex target is going to be missed by about Rs 93,000 crore for FY25. 

Traders await RBI MPC meeting: The Reserve Bank of India (RBI) is likely to cut its main policy rate on February 7 followed by just one more cut next quarter.   

Key infra sectors’ growth slows to 4% in December 2024: The output of eight key infrastructure sectors slowed down to 4 per cent in December 2024, as against 5.1 per cent growth registered a year ago.

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