In a stunning reversal that has rocked the Indian commodity markets, silver prices plummeted to the ₹2.70 lakh per kilogram mark on Sunday, February 1, 2026.
The “white metal,” which had touched a historic record high of ₹4.20 lakh just three days ago, has now lost over ₹1.50 lakh of its value in what analysts are calling a “vertical collapse.” The crash coincided with a special Sunday trading session held on the day of the Union Budget 2026.
1. The “Perfect Storm”: Why Silver Collapsed
The 35% decline from the peak was driven by a rare confluence of global and domestic factors that turned a “bull mania” into a “liquidity trap” within 48 hours.
- The “Warsh Shock”: The primary global trigger was the nomination of Kevin Warsh as the next U.S. Federal Reserve Chair. Known for his hawkish stance, his appointment signaled higher-for-longer interest rates, causing the U.S. Dollar Index (DXY) to surge and crushing dollar-denominated assets like silver.
- The “Blow-Off Top”: After gaining 171% in a single year, silver entered a “blow-off top” phase. Once the price failed to hold above ₹4 lakh, panic selling and the unwinding of massive leveraged long positions accelerated the slide.
- CME & MCX Margin Hikes: To curb extreme volatility, the CME Group (globally) and MCX (domestically) raised margin requirements for silver futures. This forced many retail traders to liquidate their positions as they couldn’t meet the higher collateral demands.
- Budget Day Speculation: The market was rife with rumors that Finance Minister Nirmala Sitharaman might cut import duties on precious metals (from 6% to 4%) to curb smuggling. Traders “sold the rumor,” driving prices lower ahead of the official announcement.
2. MCX Performance: A Vertical Drop
The volatility on the Multi Commodity Exchange (MCX) was so extreme that silver hit its 9% lower circuit almost immediately during the Sunday session.
| Date | Silver Price (MCX per kg) | Market Sentiment |
| Jan 29, 2026 | ₹4,20,048 (All-Time High) | Euphoric / Overbought |
| Jan 30, 2026 | ₹2,91,922 | Panic / Margin Calls |
| Feb 1, 2026 | ₹2,65,652 – ₹2,74,410 | Crash / Budget Jitters |
3. Impact on Silver ETFs
The crash rippled through the National Stock Exchange (NSE), where silver exchange-traded funds (ETFs) faced their worst day since their inception in India.
- Nippon India Silver ETF: Dropped nearly 12% in a single session.
- HDFC & ICICI Silver ETFs: Recorded declines between 8.5% and 10%.
- Investor Alert: Zerodha CEO Nithin Kamath warned that such “rare” moves can wipe out a decade of successful trading in hours, as standard stop-loss orders often fail to execute during a “gap-down” opening.
4. Technical Outlook: Is the Floor in Sight?
Market experts, including those from Enrich Money and Choice Wealth, suggest that while the immediate trend is bearish, the long-term structural drivers remain intact.
- Crucial Support: The ₹2.55 lakh – ₹2.60 lakh zone is now the “line in the sand.” If silver holds this level, it may stabilize.
- Resistance: Any attempt at a recovery will face heavy “selling on rallies” near the ₹3.10 lakh mark.
- Fundamental Strength: The industrial demand for silver in solar panels, EVs, and AI data centers is projected to stay at record highs throughout 2026, which could provide a fundamental floor to the price.
Conclusion: A Brutal Reality Check
The February 1 crash serves as a reminder that silver is a high-velocity asset. While the ₹2.70 lakh price point is a painful correction for those who bought at the peak, it brings silver back toward its 50-day moving average, potentially creating a more sustainable base for 2026. For now, investors are advised to avoid “catching a falling knife” and wait for the post-Budget volatility to settle.
