Markets past performance on key Budget Day post elections: Can it be any different this time?
Any Budget announcement in the Union Budget 2024 against expectations can induce a sharp correction in the indices which have run-up steeply since the election results on June 4.
![Markets past performance on key Budget Day post elections: Can it be any different this time?](https://cdn.zeebiz.com/sites/default/files/2024/07/23/306195-untitled-design-2024-05-30t121822053.png?im=FitAndFill=(1200,900))
The Modi government has returned to power for the third straight time and the stage is all set for the seventh straight budget announcement by the Finance Minister Nirmala Sitharaman at 11 am later today. So, as the headline index Nifty has galloped a great deal since the election results to the tune of 12 per cent (since June 12) and market experts opine still newer heights for the benchmark indices in case the budget comes on expected lines, here is how the markets fared primarily on the Budget day after elections.
Stock market performance on Budget Day
Budget day date |
5th July 2019 |
10th July 2014 |
6th July 2009 |
8th July 2004 |
Nifty |
-1.1% |
-1.42% |
-4.38% |
-3.1% |
Bank Nifty |
0.01% |
-2.53% |
-8.2% |
-4.1% |
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
Date |
Nifty50 |
BankNifty |
1stFeb2024 |
-0.13% |
0.42 |
1stFeb2023 |
-0.26% |
-0.35% |
1stFeb2022 |
1.37% |
1.40% |
1stFeb2021 |
4.70% |
8.26% |
1stFeb2020 |
-2.50% |
-3.30% |
1stFeb2019 |
0.58% |
-0.77% |
1stFeb2018 |
-0.10% |
-0.58% |
1stFeb2017 |
1.80% |
2.60% |
1stFeb2016 |
-0.61% |
1.12% |
1stFeb2015 |
0.65% |
3.20% |
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.
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