The Union Budget has always been a major event for the Indian market though its impact on shares has somewhat diminished in the recent past.
Budget day is usually synonymous with market volatility. The market generally remains turbulent before and after the Budget day as well. In this article, we take a look at how the market performed before and after the Budget announcements over the past 10 years.
As per data since 2013, the Indian market (Nifty) has moved less than 1 percent on the Budget day in just four of the past 10 sessions.
The market has been in the red in six of the past 10 Budget sessions with the highest fall in 2022 at 2.5 percent. Meanwhile, of the four Budget sessions of positive movement, the highest gain was in 2021 at 4.7 percent. This was the highest gain since 2001 when the market moved up by over 4 percent on the Budget day.
In only three of the last 10 years, the market was in the green in the post-Budget month, while in the remaining seven years, it was in the red during the period. The highest post-Budget monthly rise was seen in 2016, when the market surged nearly 11 percent while the maximum post-Budget monthly decline was witnessed in 2019, with the market tanking 8 percent.
In 2013 and 2014, the market was flat in the post-Budget month though in the negative territory, whereas in 2015, 2018, 2020 and 2022, the market shed 3-5 percent each in the post-Budget month. In 2017 and 2021, the market rose around 2 percent each in the post-Budget month.
A similar trend was witnessed in the pre-Budget months as well with the market rising/falling over 3 percent in five of the 10 years under review. In only two of these 10 years, the market rose in the pre-Budget month – in 2017, up 4.7 percent and in 2018, up 5.7 percent. In the remaining 8 years, a negative trend was seen in pre-Budget months.
Before 2018, the highest market gain during a pre-Budget month was witnessed in 2002 and 2000, when the market rose 11 percent each.
The market lost the most in the pre-Budget month in 2016, down 7 percent, followed by 2013, down 4.5 percent and 2021, down 3.5 percent. In 2014, 2015, 2019 and 2022, the market trend was muted in the pre-Budget month, with it falling less than a percent each.
As seen from the data, the majority of both pre and post-Budget months witnessed negative trends in the past 10 years.
In 2023, the Indian market has been muted in the month before the Budget so far. The Nifty has risen just around 0.1 percent in January till date.
The Union Budget for the financial year 2023-24 is going to be presented in the Parliament by Finance Minister Nirmala Sitharaman on February 1, 2023, at 11 am.