The Union Budget has always been a key driver for the stock market. Historical data shows that market usually see volatile trade on the Budget day as it evokes diverse reactions, ranging from highly positive to negative. As Finance Minister Nirmala Sitharaman gears up to present her sixth straight budget, ahead of the 2024 Lok Sabha elections, let’s take a look at how the market reacted to budget announcements over the past ten years.
In the last ten years, the BSE Sensex closed higher six times, while it settled in negative terrain on four occasions. The Dalal Street notched its best Budget day gain of 5% in 2021, while it registered its ten-year biggest loss of 2.43% in 2020.
Budget 2023
The share market reacted with mixed emotions to the Union Budget 2023, as euphoria about the Budget was fizzled out by Hindenburg-Adani saga, while caution ahead of the U.S. Fed policy meeting prompted investors to book profit. On the Budget day, the BSE benchmark Sensex rose 158 points, or 0.27%, to end at 59,708, paring early gains. During the session, the 30-share index zoomed 1,223 points, or 2%, to 60,773 after FM proposes measures to boost consumption and capex. In contrast, the broader NSE Nifty slipped 46 points, or 0.26%, to settle at 17,616.30.
Budget 2022
The market gave thumbs-up to FM Sitharaman’s third Budget, which was termed pro-growth by experts, propelling Sensex and Nifty to close 1.4% higher. The The BSE Sensex surged 848 points to settle at 58,862, and the Nifty 50 jumped 237 points to close the day at 17,577. During the session, the Sensex hit jumped 1,000 points to touch a high of 59,032, while Nifty 50 climbed nearly 300 points to 17,622 levels.
Budget 2021
In 2021, the stock market registered its best performance in the past 20 years, with the benchmark indices notching 5% gain. Investors cheered Union Budget 2021, which was termed as growth-oriented and balanced by market analysts. The BSE Sensex rallied 2,300 points, or 5%, to close at 48,600, and the NSE Nifty surged 647 points, or 4.74%, to settle at 14,281.
Budget 2020
The Dalal Street gave thumbs-down to Union Budget 2020, with the market witnessing biggest fall on the Budget Day in the past 12 years. The BSE Sensex tumbled 988 points, or 2.43%, to close at 39,735, and the Nifty50 declined 300 points, or 2.51%, to end at 11,662. The market reacted negatively to the Budget 2020-21 as Finance Minister Nirmala Sitharaman announced no major relief for the stock market in her first Budget speech.
Budget 2019
The domestic benchmark closed marginally higher as the Union Budget 2019, presented by acting finance minister Piyush Goyal, failed to provide any major boost to the market. The Sensex settled 212 points, or 0.59%, higher at 36,469, while the Nifty ended just short of the 10,900-mark.
Budget 2018
In 2018, the then finance minister Arun Jaitley had presented his last Budget on February 1. The stock market had reacted cautiously to Budget proposals, with Sensex ending marginally lower by 0.16%. Sentiments turned weak after the central government introduced long term capital gains tax in the Budget and also a proposal for higher dividend distribution tax on those earning more. The government also announced an increase in securities transaction tax on options and dividend tax on above ₹10 lakh dividend receipts.
Budget 2017
The market had reacted positively to the Budget proposals as FM Arun Jaitley, which presenting his Budget speech, made no reference to long term or short term capital gains tax on equities. The BSE Sensex ended 1.76% higher, its highest Budget day gain between 2010 and 2019. This was the year when Narendra Modi government scrapped the practice of presenting the Union Budget at the end of February and shifted it to February 1. The government also ended the tradition of presenting a separate Railway Budget, ending a colonial-era practice.
Budget 2016
In 2016, the Union Budget was tabled in the Parliament by Jaitley on February 29. The Sensex fell 0.66% to close above the 23,000 mark as budgetary proposals fell short of market expectations.
Budget 2015
In 2015, the benchmark index, Sensex gained 0.48% to close higher at 29,361 points as traders reacted positively to budgetary proposals. The government has proposed to reduce corporate taxes from 30% to 25%, while it also deferred General Anti-Avoidance Rule (GAAR), an anti-tax avoidance law to curb tax evasion and avoid tax leaks. The Budget was presented by Finance Minister Arun Jaitley, which was the first full-fledged Budget of PM Narendra Modi-led NDA government.
Budget 2014
In 2014, FM Arun Jaitley presented his first Budget on July 10 after Narendra Modi-led NDA government came to power. The BSE Sensex closed 0.28% lower after a swing of 800 points during the session. Investors gave a muted response to budget announcements such as incentives for Real Estate Investment Trusts (REITs), increasing FDI limit in the insurance and defence sector to 49% from 26%.
