Find out what happened in the markets today - and why you should care - with the free Daily Brief newsletter.

India's stock markets are experiencing positive momentum as the Nifty 50 and Sensex climb, driven by gains in the financial and real estate sectors ahead of the union budget on February 1.

What does this mean?

With the annual budget in sight, investor optimism is on the rise. The Nifty 50 and Sensex have climbed 1.8% over three sessions, rebounding from seven-month lows. The budget is anticipated to bolster confidence amid an economic slowdown and hefty foreign outflows, which totaled $8.8 billion in January. The Reserve Bank of India's liquidity efforts have supported a 3.4% uptick in the financial sector, while hopes of a rate cut have propelled the real estate sector up by 7%. Still, the markets are 11% shy of their September 2024 high. Meanwhile, Asian markets stayed quiet, but Wall Street gained steam with good news from Meta and Tesla, fueling hopes for lower Federal Reserve rates.

India's markets are cautiously optimistic as the union budget nears, with sectors like financials and real estate benefitting from anticipated policy shifts. Yet, challenges like foreign outflows and subdued global markets suggest investors should remain alert to potential volatility and emerging opportunities.

The bigger picture: A strategic crossroad for India.

The upcoming budget is pivotal for India, potentially impacting international trade dynamics amid US policy uncertainties. As markets anticipate long-term growth strategies and possible economic revival, the budget's outcome will likely influence both domestic and global investor confidence.