Union Budget 2026: Stock Markets Open Today, February 1, but Settlement Holiday Changes Trading

As Finance Minister presents the Union Budget 2026 on February 1, equity markets will remain open for trading, but investors need to tread carefully due to a settlement holiday that will temporarily disrupt the normal flow of transactions.

Trading Continues, Settlement Paused

A settlement holiday does not shut down trading on exchanges. Instead, it pauses the actual transfer of shares and funds. On Budget Day, investors will be able to buy and sell stocks as usual on the National Stock Exchange and the Bombay Stock Exchange. However, the back-end settlement of these trades will not take place on that day.

The disruption occurs because banks, clearing corporations and depositories such as NSDL and CDSL will remain closed, pushing settlements to the next working day.

Key Dates Investors Should Note

According to an exchange circular, markets will function normally on February 1, 2026, with regular trading hours from 9:15 am to 3:30 pm. Trades executed on Budget Day will be settled on the following working day.

This has important implications for traders. Shares purchased on January 30 cannot be squared off on February 1 due to the interrupted settlement cycle. Similarly, stocks bought on February 1 cannot be sold on February 2, limiting flexibility for short-term and intraday strategies.

Impact on Trading Strategies

While long-term investors may see little impact, short-term traders and arbitrage players are advised to factor in the delayed settlement while planning positions. The inability to square off trades across these dates could affect liquidity management and risk exposure.

Budget Expectations and Market Buzz

Adding to the anticipation, global brokerage Jefferies expects the government to raise capital expenditure by around 10% in Union Budget 2026. Defence spending is seen as a key focus area, with a potential 20% increase in defence capital expenditure likely to benefit defence public sector undertakings and allied companies.

Bottom Line

The stock market will be open and active on Budget Day, but the settlement holiday changes the mechanics behind the scenes. Investors are advised to align their trading plans with the altered settlement timeline to avoid unexpected constraints during one of the most closely watched trading sessions of the year.