Market Volatility Expected on Budget Day
As India prepares for the FY26 Union Budget on February 1, Zerodha co-founder and CEO Nithin Kamath has urged traders to tread carefully due to expected market volatility. In a post on X (formerly Twitter), Kamath emphasized that the market is likely to experience heightened fluctuations as Finance Minister Nirmala Sitharaman presents the Union Budget for 2025-26. He advised traders to reduce their position sizes, especially on event-heavy days like Budget announcements. He recommended this precautionary step for those who cannot resist trading on such significant market days.
Special Saturday Trading Session
For the first time in recent memory, Indian stock markets will operate on a Saturday due to the Union Budget’s timing. The National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) confirmed that February 1, 2025, will feature a special trading session. Pre-market trading will occur from 9:00 AM to 9:08 AM, while live updates of benchmark indices, including Nifty 50 and Sensex, will be available throughout the session. The Union Budget is a crucial event, setting the financial and economic agenda for the coming fiscal year, and is expected to stir substantial market reactions.
Liquidity and Price Action Risks
Traders and investors are likely to witness sharp price swings as they react to the announcements in the Budget. These fluctuations are common, as the fiscal policies unveiled during the Budget can directly affect market sentiment, particularly regarding tax changes, sectoral allocations, and fiscal deficit targets. However, with the trading session taking place on a Saturday—an uncommon occurrence—there may be added uncertainty around liquidity and price action. Kamath’s advice to reduce position sizes is aimed at mitigating potential risks arising from the unpredictable market environment.
In addition, Nithin Kamath confirmed that Zerodha would allow traders to engage in Buy Today, Sell Tomorrow (BTST) trades, despite Saturday being a settlement holiday. This means that traders can purchase stocks on the Budget day and sell them the following day, without facing restrictions on transactions.
