Union Budget Expectations, Q3 Earnings, and 6 Other Factors Likely to Shape Dalal Street This Week

What happened last week:
Indian equity markets ended the previous week under heavy selling pressure, weighed down by global uncertainty and sustained foreign fund outflows. The Nifty 50 slipped over 2.5% to close at 25,048, while the BSE Sensex fell nearly 2.4% to 81,537, snapping recent consolidation and pushing indices closer to key support levels.

As markets enter a crucial week, investors will track multiple domestic and global cues that could dictate near-term direction.

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1. Union Budget 2026 expectations

The biggest trigger for Dalal Street will be expectations around the Union Budget, scheduled later this week.
Market participants will closely watch for:

• Fiscal consolidation roadmap

• Capital expenditure push

• Tax relief measures for middle-income groups

• Sector-specific announcements for infrastructure, railways, defence, green energy, and manufacturing

Any indication of a pro-growth yet fiscally disciplined budget could lift sentiment, while surprises on taxation or subsidy cuts may increase volatility.

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2. Q3 earnings momentum

The December quarter earnings season remains in focus, with several heavyweight companies set to announce results. Investors will assess:

• Margin trends amid input cost pressures

• Demand outlook in IT, banking, FMCG, and metals

• Management commentary on FY26 growth

Stock-specific action is expected to dominate trading as earnings surprises — positive or negative — shape sectoral moves.

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3. Global market cues

Global equities will influence domestic sentiment, particularly:

• US market direction

• Bond yield movements

• Developments related to geopolitical tensions

Any sharp move in global risk assets could spill over into Indian markets, especially at a time when valuations remain elevated.

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4. US Federal Reserve outlook

Traders will monitor commentary from US Federal Reserve officials for signals on future interest rate cuts.
A more dovish tone could support emerging markets like India, while hawkish cues may trigger renewed foreign selling pressure.

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5. Foreign institutional investor (FII) activity

Persistent FII selling has been a key drag on Indian equities.
Markets will watch whether:

• Foreign outflows continue

• Domestic institutional investors (DIIs) absorb selling pressure

Any reversal in FII flows could provide near-term support to benchmark indices.

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6. Crude oil prices

Crude oil remains a critical macro variable for India.
A sustained rise in oil prices could:

• Worsen inflation concerns

• Pressure fiscal math ahead of the Budget

• Impact sectors like aviation, paints, and logistics

Conversely, stable or softer crude prices would be supportive for equities.

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7. Rupee movement

The Indian rupee’s performance against the US dollar will be closely tracked. A sharp depreciation could weigh on sentiment, while stability may ease pressure on import-heavy sectors.

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8. Technical factors

From a technical perspective:

• Nifty 50 faces immediate support near the 24,900–25,000 zone

• A decisive break below this level could trigger further downside

• On the upside, resistance is seen around 25,300–25,400

Volatility is expected to remain elevated as traders position ahead of the Budget.

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What to watch next:
With Union Budget expectations, earnings announcements, and global cues converging in the same week, Dalal Street is likely to witness sharp swings. Experts advise investors to stay cautious, focus on quality stocks, and avoid aggressive leveraged positions until policy clarity emerges.

Markets are entering a decisive phase where sentiment could turn quickly — either on reassurance from the Budget or disappointment from macro signals.