Last Updated:
Union Budget 2026: Despite falling on a Sunday, stock markets will remain open, making it a rare live Budget trading session
How to trade on Budget day?
Union Budget 2026: The Union Budget has long been one of the most market-moving events for Indian equities, often driving short-term volatility and setting sectoral trends through policy signals. The upcoming Budget for FY2026 is widely expected to prioritise defence spending, capital expenditure and macroeconomic stability. As a result, traders are preparing for elevated volatility ahead of key announcements.
Finance Minister Nirmala Sitharaman will present the FY26 Union Budget on February 1, 2026, at 11 am. Despite falling on a Sunday, stock markets will remain open, making it a rare live Budget trading session. Historically, Budget speeches have shaped both intraday sentiment and medium-term sector positioning.
Bajaj Broking noted that as FY27 approaches, the government’s focus appears to be on sustaining structural growth while reviving domestic demand. “Against a backdrop of geopolitical instability and tariff-related disruptions, the government is expected to balance long-term infrastructure ambitions with the near-term need to cushion the economy from external trade shocks,” the brokerage said.
It added that investors are now shifting focus from headline order-book growth to identifying companies with strong execution capabilities and robust balance sheets that can convert orders into sustainable earnings.
How to trade on Budget Day?
To navigate Budget Day turbulence, market experts have suggested strategies aimed at capturing opportunity while limiting downside risk.
Hitesh Tailor, Technical Research Analyst at Choice Broking, said with the Budget on a Sunday and India VIX at 14.45, markets are bracing for sharp intraday swings. Elevated implied volatility has made options expensive, making the post-speech “volatility crush” a key opportunity. Tailor prefers risk-defined strategies.
He recommends an Iron Condor:
- Sell 25,700 Call and 25,000 Put
- Buy 25,900 Call and 24,800 Put (protective wings)
This creates a 700-point profit plateau. The idea hinges on the expected collapse of the “uncertainty premium” after the speech, when VIX typically falls sharply. Traders can benefit from eroding extrinsic value if Nifty stays range-bound within 2–3%.
Since markets are open on Sunday, Tailor suggests initiating trades on Friday afternoon (Jan 30) to capture peak pre-event volatility. On Budget Day, he advises avoiding the 9:15–11:00 am whipsaw phase. The optimal exit window is 2:15–3:30 pm, once clarity emerges and IV compresses.
Strategy Payoff (Feb 3 Expiry)
- 25,000–25,700: Maximum profit
- 25,701–25,900: Partial profit (decreasing)
- Above 25,900: Max loss (capped)
- 24,801–24,999: Partial profit (increasing)
- Below 24,800: Max loss (capped)
Mayank Jain, Market Analyst at Share.Market, echoed the need for capital preservation. He recommends defined-risk structures such as Iron Flies, Iron Condors or credit spreads instead of naked selling to capture the post-Budget IV crush. He also warned that bid-ask spreads widen early in the speech, prompting pros to wait for liquidity to stabilise or use hedged trades.
Santosh Meena, Head of Research at Swastika Investmart Ltd, cautioned that Budget Day is historically among the most volatile sessions, often leading to retail losses due to sharp stop-loss hits in both directions. Since Budget 2026 falls on a Sunday, institutional participation may be limited, resulting in thinner order books and erratic moves driven by retail flows. He believes Sunday’s reaction may be noise, with a clearer trend emerging Monday once institutions digest policy details.
Key technical levels:
- Nifty: Support 24,900 / 24,500 | Resistance 25,500 / 25,800
- Bank Nifty: Support 59,000 / 58,000 | Resistance 60,600 / 61,800
High-growth sectors likely to be in focus include Defence, Infrastructure, Power, Financials, and Housing. Meena advises small position sizes on Sunday or waiting until Monday.
Volatility trends
Anand James, Chief Market Strategist at Geojit Investments, said Budget Day usually sees a decline in VIX as uncertainty fades. “Except for 2020, when VIX rose about 2%, this pattern has held over the last 15 years,” he noted.
Although VIX has risen in the fortnight before the Budget, it remains among the lowest readings seen two days ahead of Budget Day in 15 years. This leaves room for range expansion, making long straddle strategies attractive for traders expecting post-event directional moves.
As Budget Day 2026 nears, experts agree that disciplined risk management, understanding volatility behaviour, and using defined-risk option strategies will be essential to navigating one of the year’s most volatile trading sessions.
January 31, 2026, 15:01 IST
Read More