Budget 2022: Markets report bumper returns ahead of budget, would the same trend continue? Check analysts verdict

A month ahead of the budget, the Indian markets generally show strength. According to an exclusive report by Zee Business Senior Research Analyst Varun Dubey, both the benchmark indices report a bumper rally given an average return of around 2 per cent in the last 5 years between 2017-2021. 

According to Zee Business analyst, both the benchmark indices – Sensex and Nifty – have reported a rally, except for January 2020. Dubey explained that the negative return in 2020 is mainly on the back of two reasons, Covid cases being reported in India and the then US President Donald Trump making statements against China and fear of trade war had emerged. 

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Year-wise a month ahead of budget, the Nifty grew 6.5 per cent, 4.6 per cent, 0.3 per cent and 2.1 per cent in 2017, 2018, 2019 and 2020, respectively, while in 2020 it declined by 4.2 per cent. Similarly, the Sensex jumped 5.7 per cent, 5.4 per cent, 1.1 per cent, 1.8 per cent in 2017, 2018, 2019 and 2021, respectively, while in 2020 it was down 3.7 per cent in the month ahead of Budget. 

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The analyst also explained in the last five years, the budget date had been changed from the last working day of February to 1st February of every year, this was changed by the then finance minister Arun Jaitley during the first tenure of the Modi government. 

If we remove the year 2020 negative growth, the benchmark indices have registered a growth of 3.5 per cent. In this, Zee Business Managing Editor Anil Singhvi opined, “The year 2020 had been an exceptional and shouldn’t be taken into record as the situation like covid may not happen again.” 

Similarly, following the benchmark cues, even the Bank Nifty registered growth in three of last five years from 2017-2021 a month ahead of budget.  

In this, the banking index gave returns of 10.1 per cent in 2017, 6.6 per cent in 2018, and 5.8 per cent in 2021, while it was flat with the negative bias of 0.3 per cent in 2019 and followed the trend of the benchmark in 2020 to report negative growth of 4.2 per cent. 

According to Dubey’s report, if we remove the covid year that is 2020, the Nifty Bank has reported a bumper growth of 5.5 per cent in the last five years term, a month ahead of budget. 

Sectorally, the Information and technology sector had been the top performer a month ahead of budget, according to the last five years report as, it registered a growth of 4 per cent on an average during the said time period. 

Except for 2017, the IT sector has reported a surge in all the following years, by 11.1 per cent, 8.9 per cent, 4 per cent, 2.8 per cent in 2018, 2019, 2020, and 2021 respectively, while in 2017, it had fell by 6.2 per cent as a month ahead of budget. 

If we remove the year 2017 decline, the IT sector has reported growth of 7 per cent alone in January ahead of budget, the Zee business analyst states. 

Citing the reasons for the extraordinary surge in the IT sector, the managing editor says, the third-quarter results of IT companies across segment report bumper returns generally, besides, most of the IT firms’ buyback takes place in January. Moreover, the global IT firms prepare budgets in January as the start of the calendar year, also acts trigger, Anil Singhvi further said. 

Adding to Singhvi’s view, the market analyst Kunal Sarogi said the charts of IT companies’ shares look beautiful as almost all show a new breakout, including mid and small-cap companies such as Coforge, Persistent systems. 

Another market analyst Vijay Chopra pointed out, “We touched 200 DMA in Bank Nifty, lately, Budget is an annual phenomenon, and the market expects from the budget, it being the biggest event.” 

Amid this rally ahead of budget 2020, Chopra expects, “We would see a rally between 18000-18300/400 in Nifty50, moreover, the stocks will see higher surge than indices.” He advises, investors to play around themes such as sugar, metal and infra, also sees Nifty Bank reclaiming 39000-level.