Budget Day Trading: Mixed Moves, Sudden Spikes, and a Lesson in Discipline

Today began with both indices posting only minor changes at the open. Banknifty opened with +5.35 points gap-up, while Nifty opened +20.20 points higher—both moves considered flat.

Coming into the session, I expected a single-trend day rather than the choppy pattern seen on recent Fridays. The market did indeed lean bullish in both indices the previous trading day, although Nifty’s momentum looked stronger than Banknifty’s. I also anticipated a potential red candle in Banknifty since it had been climbing consecutively on the daily chart, but that caution seemed to clash with the day’s overall optimism.

February 1st is Budget Day, and many participants expected notable announcements from Finance Minister Nirmala Sitharaman, who is delivering her eighth consecutive budget speech. Reflecting on last year’s Budget Day (February 1, 2024), the market did not show dramatic price swings post-announcement. I recalled placing an option buying trade after 11:55 AM back then, which ended in a loss, and recovering through an option selling strategy at the ATM Call and Put strikes. This year, I planned a similar approach—start with a strangle-type position and only go directional if I saw a clear setup.

Consistent with that plan, I sold ATM strike 23,500 CE at ₹236.95 and 23,500 PE at ₹232.35 early on, fully aware that news events might spark volatility. My intention was to close the position once the budget was presented and if a clear directional move emerged on the charts.

The first 5-minute candle in Banknifty covered about 266 points, and Nifty spanned roughly 100 points in the same period. After that initial burst, both indices seemed range-bound, possibly awaiting the budget details. Banknifty hovered around 49,730, a key level from which it has previously bounced. If this level acted as resistance, a turnaround was likely—technical considerations, however, can become secondary on a major news day.

Although Banknifty traded above its day’s high for a while, ICICI Bank and HDFC Bank—two heavyweights in the index—showed limited contribution. AXIS Bank and IndusInd Bank picked up some slack, nudging Banknifty upward. Meanwhile, Nifty extended its modest gains, but the real question was whether the market would hold its levels once the budget announcements concluded.

Banknifty did manage a breakout, pushing through the support-resistance flip around 49,730 and edging closer to 50,000. As it approached that round number, I added 23,500 PE at ₹154.30 based on a 15-minute setup. Initially, it showed a decent profit, but a sudden spike went against me, and I exited at ₹180. Soon after, Banknifty reversed sharply from the 50,000 mark, diving down to 49,500.

Over in Nifty, a similar scenario played out. The index surpassed the 23,600 level, briefly rising about 32 points, before quickly falling back to 23,400. Though these swings could be partly attributed to budget-related announcements, it highlighted how quickly intraday sentiment can shift, especially around key psychological levels like 50,000 in Banknifty.

Amid the budget coverage, I inadvertently allowed external influence to override my usual strategy. While listening to a YouTube stream, I entered a 23,400 PE sell at ₹150.30. When the price moved against me, I exited at ₹175, booking a small loss. This was not a trade I would typically take under my own logic—my rules emphasize verified setups, not reacting to commentator opinions. Breaking that rule cost me. I should have remembered that news days can be unpredictable, and discipline is even more critical.