New Delhi, February 1, 2026 — Indian financial markets turned volatile on Sunday as the Union Budget loomed, with both equities and precious metals suffering notable declines. Widespread uncertainty over fiscal policy and import duty decisions pushed investors toward safety, triggering sharp sell-offs across benchmark indices and commodity screens.
The headline indices — the BSE Sensex and the Nifty 50 — saw early weakness as traders adjusted positions ahead of the Budget announcement. Simultaneously, gold and silver prices plunged sharply on the Multi Commodity Exchange (MCX), reflecting broader risk-off sentiment across markets.
Equities Under Pressure
Domestic equities opened lower with benchmark indices cutting gains from earlier sessions:
- The Sensex slipped, weighed down by heavyweight financials and metal stocks, while broader markets struggled to find firm footing.
- The Nifty 50 also dipped, with selling pressure seen across key sectors including banking, autos, and consumer goods.
- Investors remained cautious as traders digested global cues — including weak Asian equities — and wrestled with expectations over government fiscal measures.
Analysts attributed the risk aversion to continued uncertainty over taxation and duty structure announcements in the upcoming Budget, which are widely expected to influence corporate earnings and consumption demand.
Gold, Silver Retreat Sharply
Parallel to equity weakness, precious metals experienced heightened volatility:
- Gold futures on the MCX declined significantly, retracing from recent highs as traders unwound positions on fears of reduced safe-haven demand.
- Silver prices, which had surged in prior weeks, recorded one of the steepest one-day drops among commodities, reflecting intensified selling ahead of policy clarity.
Market participants noted that any potential change in customs duties could materially alter the cost structure for bullion imports — a key determinant of domestic prices.
Import Duty Speculation Drives Volatility
A key theme driving volatility across both equity and commodity markets was intense speculation over possible changes in import duties on gold and silver in the Budget.
Industry sources and analysts indicated that even minimal adjustments could ripple through jewellery demand, foreign exchange outflows, and consumption patterns. Traders priced in multiple scenarios, ranging from duty cuts aimed at stimulating buyers to duty hikes targeting the trade deficit.
Global Cues Weigh In
International markets also contributed to the cautious mood:
- Asian markets were broadly weaker in early deals, extending overnight losses in the US and Europe.
- The US dollar strengthened against major currencies, reducing the appeal of dollar-denominated gold.
- Safe-haven demand appeared muted as investors favoured equities in other markets, reducing global precious metals demand.
Physical Markets Stay Cautious
In city bullion markets, jewellers reported subdued customer interest as buyers took a wait-and-see approach. The expectation of post-Budget price shifts discouraged large purchases, especially in silver where industrial demand has historically influenced pricing trends.
What Investors Are Watching Next
With the Budget speech set to address taxation, spending priorities, and import duties, markets are bracing for possible policy measures that could alter investor sentiment:
- Any signal regarding customs duties on gold and silver will be closely watched by bullion traders and jewellers.
- Equity investors will assess corporate tax trends, incentive announcements, and fiscal deficit targets for clues on economic growth prospects.
- Currency markets and global risk indicators will continue to influence sentiment in the near term.
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