Budget 2025: All Eyes on Indian Stock Market - Will Sensex, Nifty Rise or Fall After Budget Day?

 - Sakshi Post

The stock markets, Sensex and Nifty, have fallen nearly 2% in the run-up to the Union Budget and are likely to end in the negative for the fourth consecutive month. This would be the first time since 2001 that both indices have posted losses for four months in a row. However, historical market trends suggest that when expectations are low, the Budget has often surprised on the upside.

Looking at data from the last 12 years, market analysts have noted that 75% of the time when the Nifty has experienced negative returns in the month leading up to the Budget, the market has bounced back with an average return of 7% in the following three months. Moreover, during these years, 75% of the time, the week after the Union Budget has also been positive for the Nifty50, with an average gain of around 2.7%.

For example, in 2023, when Nifty fell by almost 4% before the Budget, it went on to deliver a strong 6.5% return in the next three months. In 2016, despite Nifty falling by 4.4% prior to the Budget, the market soared with a 22% return within the next three months.

Given that Nifty has experienced four consecutive months of decline, analysts predict a potential “mean reversion,” where the market could bounce back following the Budget. Historical data backs this view, with the Nifty showing positive returns 12 out of the last 18 Budget sessions since 2010.

Apurva Sheth, a market expert from SAMCO Securities, also points out that whenever the Nifty has fallen by more than 1% a week before the Budget, it has always rebounded strongly with positive returns after the Budget.

Despite these patterns, market sentiment remains cautious, with many market participants entering this Budget with low expectations. Analysts believe that this could work in the market's favor. Equity markets are likely to "rule out bad news," and even if the Budget doesn't introduce any major new policies, this could be seen as a positive sign.

Krishna Appala, Sr. Research Analyst at Capitalmind Research, suggests a wait-and-watch approach in the coming days, cautioning investors to stay alert for any unexpected negative policies that could weigh on market performance.

As for the Budget itself, experts are expecting it to focus on welfare measures, agriculture, and infrastructure development. There is also a continued push for manufacturing under the PLI (Production Linked Incentive) scheme. A segment of the market is hoping for tax relief for the middle class to boost consumption.

Industries related to agriculture, agrochemicals, infrastructure, and capital goods may benefit significantly from the Budget. Additionally, renewable energy and healthcare sectors could see more attention as part of broader structural reforms. On the other hand, consumption-driven sectors may face short-term pressure if fewer direct stimulus measures are announced. However, rural welfare and income-boosting initiatives could counterbalance this impact, according to market experts like Sonam Srivastava, Founder of Wright Research PMS.

With the current market volatility, all eyes are on the Budget to see how it impacts investor sentiment and market performance.


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 - Sakshi Post
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