Budget 2024: Market moved less than 1% in just 7 of last 24 budget sessions

As per data from the last 24 years (Feb 1), in only 7 budget sessions during this period, the Indian market moved less than 1 percent on the budget day. (Pixabay)
As per data from the last 24 years (Feb 1), in only 7 budget sessions during this period, the Indian market moved less than 1 percent on the budget day. (Pixabay)

Summary

As per data from the last 24 years (Feb 1), in only 7 budget sessions during this period, the Indian market moved less than 1 percent on the budget day. 15 times the market trend was negative while it was positive on the remaining 9 budget day sessions.

The Union Budget has always been one of the major trendsetters in the Indian market. Budget day is usually synonymous with market volatility. As per data from the last 24 years (Feb 1 budget), in only 7 budget sessions during this period, the Indian market moved less than 1 percent on the budget day.

After an extremely volatile session, Indian indices ended the previous budget session (February 1, 2023) on a mixed note. Sensex closed 158 points, or 0.27 percent, higher at 59,708.08 while the Nifty ended at 17,616.30, down 46 points, or 0.26 percent. This was the first time since 2018 that the Indian indices moved less than one percent on the budget day. In 2018, the market ended flat, down just 0.1 percent on the budget day.

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In 2022, the market ended 1.4 percent higher, while in 2021, it surged 4.7 percent on budget day. Meanwhile, in 2020, the market fell 2.5 percent and in 2019, it shed 1.1 percent.

Read here: Budget 2024 Expectations: A look at key sectors that will be in focus this year

Another important point to note is that in the last 24 years (Feb 1 budget), 15 times the market trend was negative on the budget day with the highest fall of 5.8 percent in 2009. Meanwhile, in the remaining 9 budget sessions, the market was in the green.

Moreover, the market gained over 4 percent on the budget day in 2 of those 9 sessions. In 2021, the markets rose 4.7 percent on budget day and before that, the market moved over 4 percent in 2001 on budget day.

YearNifty performance on Budget day (%)YearNifty performance on Budget day (%)
2023-0.220110.5
20221.420101.3
20214.72009-5.8
2020-2.52008-1.1
2019-1.12007-3.8
2018-0.120060.2
20171.820052
2016-0.62004-3.1
20150.620031
2014-0.22002-4
2013-1.820014.3
2012-1.12000-3.9

Looking at the trend pre and post the budget day, in only 9 out of the last 24 years has the market moved less than 4 percent plus/minus in the post-budget month, suggesting that market volatility should be expected post budget.

Furthermore, in 14 out of 24 years, the pre-existing trend has reversed post-budget (pre-budget month vs post-budget month). Historically pre-budget month has a positive bias whereas post-budget month has a negative bias.

Read here: Budget 2024: Election influence likely but fiscal health to remain in focus

Meanwhile, in 10 of the last 24 years, both pre and post-budget market trends were negative. 2023 was one such year when the pre-budget and post-budget months remained in the red, down over 2 percent each. The same was the case in 2022 when the Nifty fell 3 percent in Feb (post budget) and was down 0.1 percent in Jan (pre budget).

However, in 2021, the market fell 3.5 percent in the pre-budget month while was up around 2 percent in the post-budget month.

In 2020 (when the pandemic hit), the market was in the red for both pre and post-budget months, down 1.8 percent and 3 percent, respectively.

Read here: Nifty Realty vs Nifty Energy: Which index should one bet on ahead of Budget?

The last time the market was in the green during the pre-budget month was in 2018, when it rose 5.6 percent. Before, 2018, the highest market gain during a pre-budget month was witnessed in 2002 and 2000, when it rose 11 percent each.

However, in the post-budget months, the highest surge in the market was seen in 2016, up 10.75 percent.

Read here: Budget 2024: What should your investment strategy be?

The Interim Union Budget for the financial year 2024-25 is going to be presented in the Parliament by Finance Minister Nirmala Sitharaman on February 1, 2024, at 11 am. Given the impending Lok Sabha elections projected for April to May 2024, the budget is likely to refrain from major declarations. The detailed budget unveiling will take place post the elections and the formation of a new government.

“We believe that the interim Budget will retain the growth roadmap and reaffirm the government's commitment to long-term growth, with a continued focus on infrastructure development. The impact of the Union Budget on the equity market has reduced notably over the past few years, with the government undertaking most of the reforms outside the purview of the Budget. Nonetheless, the market participants continue to view it as a critical catalyst stimulating the growth of the Indian economy and, thereby, the Indian market," said Pranav Haridasan, MD and CEO, Axis Securities. 

Read here: Budget 2024: No change likely in capital gains taxes this time, says Hemant Sood of Findoc

He added: “With the Budget being an interim one and a vote on account, we do not see significant announcements in this Budget. However, we expect key policy reforms, such as Atmanirbhar Bharat, Make in India, and the PLI scheme, to continue and receive further impetus in FY 25. There may be an increased emphasis on power, utilities, and renewables. Railways, infrastructure, and capital goods companies are poised to remain in the spotlight with higher capex spending. Automobiles and FMCG are likely to get a boost from higher rural spending."

 

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 taking any investment decision.

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