The Union Budget 2025-2026 is set to be presented tomorrow, 1 February 2025, and the Indian stock market participants are bracing for a volatile trading session. Adding to the unusual market dynamics, the Indian equity market will remain open for trading on a Saturday, making it an eventful weekend for investors and traders alike.
Nithin Kamath, Founder & CEO of Zerodha, took to social media platform X to share insights on how traders can navigate Budget Day volatility. He advised traders to be cautious, particularly on high-impact event days like the Budget announcement.
“Markets are bound to be volatile, so trade with caution. If you are an active trader, I guess you should reduce trading size during event days. That is, if you cannot stop yourself from trading,” Nithin Kamath wrote in a post on X.
His advice comes as a reminder that unpredictable market movements can lead to significant gains or losses in a short span.
Historically, Budget Day has seen sharp swings in benchmark indices like the Sensex and Nifty. Traders and investors react swiftly to announcements on taxation, fiscal policy, and sector-specific allocations.
How Traders Can Prepare for Budget Day Volatility
Reduce Trade Size – Budget announcements often lead to sharp market movements. Keeping positions smaller can help mitigate potential losses.
Avoid Overleveraging – Given the unpredictability, using excessive leverage could be risky.
Focus on Long-Term Trends – While intraday volatility will be high, long-term investors should focus on fundamental takeaways from the budget.
Set Stop Losses – To protect capital, having a well-defined stop-loss strategy is crucial.
Monitor Key Sectors – Budgets typically impact certain sectors more than others, such as infrastructure, banking, and manufacturing. Watching these sectors closely can help traders identify potential opportunities.
As the budget unfolds, traders and investors alike should stay informed and make well-calculated decisions to navigate the market efficiently.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.