Markets past performance on key Budget Day post elections: Can it be any different this time?

So as is evident, markets tumbled and Nifty ended lower on the last budget announced after the elections.The drag was largely influence by the FM’s decision concerning announcement of a tax surcharge on  super-rich which later propelled sharp outflows.

10 Year Historic- Nifty and Bank Nifty's performance on last 10 Budgets

What is expected on market performance as Budget 2024 is set to be released?

Anand James, Chief Market Strategist, Geojit Financial Services on the Nifty outlook today said the MACD histogram exhaustion and the potential formation of an Evening Star candlestick on the weekly timeframe suggest a buildup of weakness. This technical setup could lead the index towards the 24,130 - 24,000 levels, which may initially serve as a base for reversal attempts. However, a breach below 24,000 could lead to further downside risks, with the next support zone lying between 23,055 - 23,000. On Budget Day, heightened volatility is expected, with 24,620 - 24,370 marked as the critical intraday range, he added.

V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services is of the view that the market participants will be closely watching for any tweaks in LTCGs tax. If there are no changes in LTCGs tax that will be a big relief for the market and the market is likely to react positively to that. Stock specific reactions will depend on the Budget proposals for specific sectors."

Suman Bannerjee, CIO, Hedonova on market performance on the Budget Day said while there is expected heightened volatility given the high expectations for tax relief in personal income tax and capital gains taxation. A favorable budget, increasing exemption limits or rationalizing tax slabs, could enhance market sentiment and stimulate a rally, particularly in consumption-driven sectors. Conversely, if the government prioritizes fiscal consolidation without offering tax relief, the market may experience a steep correction. Additionally, concerns about potential regulatory changes add to the cautious atmosphere. Overall, the market's mood is one of cautious optimism, contingent on Finance Minister Nirmala Sitharaman's announcements to shape the immediate market reaction.