While some Budgets in the past sent the stock markets soaring, others led to a crash. However, most of the times, Budget day saw the stock market losing value. In the last 10 years, the market fell 9 out of 13 times on budget days, including interim budget days
The stock market of any country is one of the barometers of the economy, which is why perhaps the Budget is presented during the market hours now (read more about it here).
The prices of stocks depend upon the performance of the listed companies and other economic factors like liquidity, inflation rate, employment rate, GDP, and others. “GDP is real growth in the value of goods and services of a country. Add inflation to that, and you get nominal growth. For listed companies that’s the growth in value of goods and services or top line growth. Bottom line or profits are linked to revenue, and stock markets are linked to growth in profits of listed entities,” says Lovaii Navlakhi, managing director and CEO of Sebi-registered financial planning firm International Money Matters.
Here’s how the markets reacted to the Budget announcements in the past 10 years.
This was the first time that the Indian Union Budget was presented digitally in a ‘Made in India’ tablet device due to the ongoing Covid-19 pandemic. The markets welcomed the Budget presented by Finance Minister Nirmala Sitharaman and rallied with massive gains. The BSE Sensex was up by a massive 2314.84 points and closed at 48,600.61. The NSE Nifty 50 was up by 646.60 points and closed at 14,281.20 points.
The markets remained open for the Budget in 2020, though the announcement was made on a Saturday. The stock market reacted negatively to Sitharaman’s second Budget, and the day saw the steepest Budget day crash in 11 years. The BSE Sensex was down by a massive 987.96 points to close at 39,735.53. The NSE Nifty 50 fell by 300.25 points from its opening to end at 11661.85 points.
This was the first time a woman finance minister, Sitharaman, was presenting the Indian Union Budget after 1971’s Budget presentation by Indira Gandhi, when she held the additional finance portfolio. It was presented on July 5, 2019. Stock markets, however, reacted negatively to this Budget. The BSE Sensex crashed by 987.96 points but managed to recover slightly and hence closed with a loss of 394.67 points at 39,513.39. The NSE Nifty 50 was also down by 135.60 points and closed at 11,811.20 points.
The year 2019 saw two budgets as it was an election year. Power minister Piyush Goyal presented the 2019 Indian Union Interim Budget on February 1, 2019. The markets reacted positively to this Budget. The BSE Sensex was up by 212 points at 36,469.43. The Nifty 50 was up by 62.7 points at 10,893.65 points.
The 2018 Indian Union Budget was presented by then Finance Minister Arun Jaitley. It was his last Budget presentation. The stock markets reacted negatively to this budget BUT closed the day with minor losses. The BSE Sensex was down by 58.36 points and closed at 35,906.66. The NSE Nifty 50 fell 10.80 points at 11,016.90 points.
The date of presentation of the 2017 Indian Union Budget was brought forward for the first time to February 1 by Jaitley. Since then, February 1 has been the usual day for Budget presentations. The markets reacted positively to this Budget and posted its biggest intraday gain since 2010’s Budget day trade. The BSE Sensex was up by 485.68 points and closed at 28141.64. NSE Nifty 50 was also up by 155.10 points and closed at 8716.40 points.
The 2016 Indian Union Budget was presented by Jaitley on February 29. Markets reacted negatively to this Budget and, hence, closed the trading day with a loss. The BSE Sensex was down by 152.30 points and closed at 23,002.00. The Nifty 50 was also down by 42.70 points and closed at 6987.05.
The 2015 Indian Union Budget was presented by Jaitley on February 28, which was a Saturday. The stock markets are usually closed on Saturday but for the budget presentation specifically, it was kept open from 9.15 am till 3.30 pm. Markets reacted positively to this Budget but ultimately closed with a loss due to profit booking. The BSE Sensex was up by 148.99 points at 11 am but closed the day down by 49.83 points at 29,361.50. The Nifty 50 also closed the day at 8901.85 points, with a loss of 11.2 points.
This was Jaitley’s first budget in his term as finance minister and was presented on July 10, after the Bharatiya Janata Party came to the centre in May that year. The markets reacted negatively to this Budget and the stock market ended the day with a loss. The BSE Sensex was down by 72.06 points to close at 25,372.75. The Nifty 50 was also down by 17.25 points and closed at 7,567.75 points.
Since it was an election year, then FM P. Chidambaram presented the interim Union Budget on February 17. The markets reacted negatively to this Budget and closed the day with losses. The BSE Sensex was down by 28.37 points from its intraday high of 20,492.43. The Nifty 50 fell 7.35 points from its intraday high of 6,080.65 points. The Sensex and Nifty closed at 20,464.06 and 6,073.30, respectively.
The stock market reacted negatively to the 2013 Budget, which was presented by Chidambaram. The BSE Sensex was down 403.26 points and closed at 18,861.54. The Nifty 50 fell 141.3 points to end at 5,693.05 points.
The 2012 Budget was presented by then FM Pranab Mukherjee and it was his last budget. The stock market, however, reacted negatively to this Budget. The BSE Sensex was down 444 points from its intraday high point of 17,871. The Nifty 50 was also down by 62.60 points. The Sensex and Nifty closed at 17,466.20 and 5,317.90, respectively.
The 2011 Budget was presented by Mukherjee on February 28. The stock markets reacted positively to this Budget. The Sensex was up by 122 points at 17,823 and Nifty 50 was up by 29.70 points to end at 5333.25.
