The Finance Minister Nirmala Sitharaman presented her eighth consecutive Union Budget on Saturday. Notably stock markets were open on Saturday to accommodate reactions to the several announcements made in the Budget.
The benchmark indices opened in the green on February 1, the day of the presentation of the Union Budget 2025. The 30-share benchmark index opened at 76,888.89 levels and the Nifty opened at 23,296.75. However, the presentation of the Union Budget for 2025 failed to cheer the markets as benchmark indices traded in the red.
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The 50-share Nifty traded in the red retreating to 23,424.95 levels down by 83.45 points or 0.35 per cent. On the other hand, the Sensex traded at 77,272.04 levels down by 228.53 points or 0.29 per cent. Out of the 50 stocks listed on the Nifty 50, 18 advances were seen compared to 33 declines at the time of writing this story.
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Prashanth Tapse, Senior Vice President and Research Analyst at Mehta Equities Ltd. told Outlook Money that the markets traded lower today due to a lack of announcements related to capital expenditure for sectors such as railways and defence. He added that the cautious fiscal approach adopted by the Finance Ministry was necessary, however, it did not provide the ‘push’ the market was looking for.
“Markets turned red post-budget as key expectations, particularly on capex for sectors like Railways and Defense, were unmet. Investors were also hoping for major employment-driven reforms, which were missing in the speech. The cautious fiscal approach, while necessary, did not provide the big-ticket growth push the market was looking for,” Tapse said.
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How Sectoral Indices Responded
Only five out of the fifteen sectoral indices were trading in the green at the time of writing this story following the presentation of the Union Budget. Sectoral indices such as Nifty FMCG, Nifty Auto, and Nifty Consumer Durables gained the most following the presentation of the budget and traded higher by 4.01 per cent, 2.52 per cent and 1.96 per cent respectively at the time of writing this story. On the other hand the Nifty Financial Services Ex-Bank, Nifty Oil & Gas and NIFTY Financial Services traded lower by as much as 2.33 per cent at the time of writing this story.
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How Markets Have Responded To The Budget Historically
Historically, announcements made in the Union Budget create significant movement in the markets. Over the last 24 budgets presented in the past 20 years, as many as 10 budget days recorded positive returns. Notably the market only gave returns of over 1 per cent on the day of the budget and eight budget days saw declines of more than one per cent.
Outlook Post Budget
Tapse projected that volatility is likely to persist in the market in the coming days as investors reassess sectoral allocations and policy implications. Notably, the India VIX which measures volatility in the market was at 14.38 levels down by 3.01 points or 17.32 per cent.
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“In the coming days, volatility may persist as investors reassess sectoral allocations and long-term policy implications. While it's too early to take a final call on the budget's impact, the lack of bold reforms in critical areas may weigh on sentiment, with execution now being the key focus,” Tapse said.
