Budget 2024: How Sensex performed on Budget day in last 10 years?

Investors are eagerly awaiting the Union Budget on July 23, expecting finance minister Finance Minister Nirmala Sitharaman to announce growth-oriented measures as this event has always been a key driver for the stock market. Analysis of data over the past 10 years shows that the Sensex has closed higher seven times, while it settled in negative terrain on three occasions. The equity benchmark Sensex has registered its strongest rally of 5% on the Budget day in 2021, while it registered the biggest loss of 2.4% on the eve of the Budget in 2020.

On February 1, 2024, when FM Sitharaman presented her sixth straight budget, ahead of the 2024 Lok Sabha elections, the market closed marginally lower in choppy trade as investors opted for profit-taking amid mixed cues. The BSE Sensex settled 106.81 points, or 0.15%, lower at 71,645, and the NSE Nifty slipped 28.25 points, or 0.13%, to close at 21,697.

In the last one month, the equity benchmark Sensex and Nifty50 have surged over 4% in pre-budget rally, hitting new all-time highs on multiple occasions. The Sensex has rallied over 14% in the last six months, adding more than 10,000 points to cross 80,000 points for the first time. This was the fastest 10,000-point gain in its history as the index took 138 sessions to achieve this hit 80K levels. The recent rally in the domestic stock market can be attributed to India’s GDP growth, credit expansion, ease in volatility, and policy continuity after the Modi government came back to power for the third time. 

Historical trend of Sensex and Nifty on Budget day in last 10 years

Budget 2023

The share market reacted with mixed emotions to the Union Budget 2023, as euphoria about the Budget was fizzled out by the 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 proposed 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 a 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 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 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

Dalal Street gave a thumbs-down to Union Budget 2020, with the market witnessing the 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 ended higher on the Budget day in 2019, presented by acting finance minister Piyush Goyal. The Sensex settled 212 points, or 0.59%, higher at 36,469, while the Nifty ended just short of the 10,900-marks.

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 late FM Arun Jaitley, while 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, registering 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 29,362 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 0.48% higher after a swing of 800 points during the session. Investors gave a positive 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%.

What lies ahead?

Going ahead, Morgan Stanley Research predicts that the Indian economy could surpass Japan and Germany to become the world’s third-largest by 2027. In parallel, the domestic stock market is on track to rank third in the world by the end of this decade.

Domestic brokerage Prabhudas Lillladher expects Nifty to reach 25,816 in the next 12-month, saying that progressive budget, normal monsoons and strong inflows will further re-rate markets.

Another domestic brokerage, Axis Securities has given Nifty target of 24,600 by valuing it at 20x on Mar’26 earnings. The agency believes that the money may flow towards largecap stocks in the near term, recommending investors to remain invested in the market and build a position in high-quality companies (where the earnings visibility is quite high) with an investment horizon of 12-18 months.

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