Budget day blues! Nifty slides for 3rd straight time on budget day – a look at how market fared in last 10 years

Budget 2025 Day: After starting the session on a negative note, Indian indices turned volatile to end mixed on Saturday, February 1, post the budget presentation.

In intra-day deals, BSE Sensex lost 494 points to its day's low of 77,006.47 while Nifty shed 190 points to 23,318.30. However, both indices made a strong recovery and settled flat, marking the third consecutive year of less than a 1 per cent movement on Budget Day. 

Despite the initial volatility, investor sentiment remained mixed, with the market's overall response to the Budget being one of cautious optimism.

The Sensex ended 5.49 points or 0.01 per cent higher at 77,505.96. However, the Nifty settled 9.35 points or 0.04 per cent lower at 23,499.05.

Market Performance

In the previous budget session on February 1, 2024, the Sensex ended 106.81 points or 0.15 per cent lower at 71,645.30, while the Nifty closed 28.25 points or 0.13 per cent lower at 21,697.45.

Before 2023, Indian indices moved less than one per cent on the budget day in 2018, when the Nifty ended flat, down just 0.1 per cent. In 2022, the 50-pack index ended 1.4 per cent higher, while in 2021, it surged 4.7 per cent on budget day. Meanwhile, in 2020, the index faced a 2.5 per cent decline and in 2019, it shed 1.1 per cent.

As per data since 2015, the Indian market has moved less than 1 per cent on the budget day in five of the past 10 budget day sessions (Feb 1), excluding 2024.

In this period, the market has fallen the most in 2020, down 2.5 per cent, and gained the most in 2021, up 4.7 per cent. This was the highest gain since 2001 when the market moved up by over 4 percent on budget day.

Another important point to note is that in the last 10 years (Feb 1 budget), 6 times the market was in the red and it ended in the green in only four budget day sessions.

Budget Highlight

A significant positive takeaway from the Union Budget 2025 was the increase in the income tax exemption limit to ₹12 lakh under the new tax regime, which is expected to fuel consumption, savings, and investment. While there were widespread expectations that the tax exemption would rise to ₹10 lakh, the ₹12 lakh limit came as a welcome surprise, potentially leading to increased disposable incomes for middle-class taxpayers.

However, market experts expressed concerns about the government's reduced focus on infrastructure capex in FY25, as the ₹11 lakh crore target was lowered to ₹10.18 lakh crore, mainly due to spending delays. Despite these concerns, analysts remained generally positive about the overall impact of the Budget.

Analysts' View on Market Sentiment

Commenting on the Budget, Utsav Verma, Head of Research - Institutional Equities at Choice Broking, highlighted the balance struck between fiscal prudence and growth-oriented measures. “Budgets are always a tight rope walk for the government, and this government has commendable fiscal prudence, reducing the fiscal deficit target sharply to 4.4% of GDP compared to 4.8% last year. While the focus on public capex has been fine-tuned, it’s encouraging that the government is relying on private capex to pick up,” Verma said.

He emphasised that consumption-driven sectors, including private sector banks, FMCG, automobiles, and retail, would benefit from the income tax relief. Additionally, interest rate cuts, expected to follow in the coming months, could further support growth in these sectors.

Sonam Srivastava, Founder of Wright Research, shared a similar outlook, stating, “The Union Budget 2025-26 presents a well-balanced approach between fiscal prudence and growth-oriented measures, which is expected to have a positive impact on the Indian markets. The government’s commitment to infrastructure spending, MSME support, and private sector participation indicates a continued push for economic expansion.” 

She further emphasised that the manufacturing and exports, coupled with targeted incentives for sectors like technology, renewable energy, and defence, could create new growth opportunities.

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 decisions.