Mapping Markets During Budgets: Mixed Cues Over The Decade Signal Caution

As the Narendra Modi-led government gears up to unveil the 2025 Union Budget, historical stock market data does not point towards any particular trend before, on, and after the budget day. This signals the traders to be cautious during the volatile period.

While volatility rose ahead of several budget days in the past, the benchmark NSE Nifty 50 has delivered both gains and losses, with extreme fluctuations in 2020 (-4.17%) and 2017 (+3.87%).

Over the past five budgets, Nifty 50 has consistently declined during the week leading up to the announcement of budget, reversing an earlier trend of consistent advance that was recorded every year since 2014.

Furthermore, the sentiment seems to be mixed in the week following the budget, where markets have shown positive momentum in five of the last 10 years. Notably, 2021 witnessed a significant post-budget rally of 5.84% following a pre-budget decline of 2.12%.

On budget days itself, Nifty 50 has seen sharp reactions, with the most notable gains in 2021 and 2017, while sharp declines were observed in 2020 (-2.51%). It should be noted that the benchmark gauge fell during most of the budget day sessions in the last 10 years.

Sector-wise, indices like Nifty FMCG and Nifty PSE have risen five times in the last 10 years, the highest among major Nifty sectors. Nifty Energy has fallen the most number of times followed by Nifty Bank.

Infrastructure stocks will be the key focus on the budget day with analysts giving mixed views on the thrust of the government's capital expenditure.

A rejig in customs duty on a range of imported items, new Income-Tax Bill, and tweaking of the new tax regime for individuals by reducing tax rates for income up to Rs 10 lakh could be on the anvil, NDTV Profit has learnt so far, from persons familiar to the development. The government may also cut the customs duty on seven to eight high-end imported goods, according to sources.