Sensex Shines: Positive Returns For Investors In Four Out Of Last Five Budget Days
As the interim budget approaches, traders and investors express optimism, anticipating populist announcements with the 2024 parliamentary elections on the horizon. On February 1, Union Finance Minister Nirmala Sitharaman is set to present the budget for the sixth consecutive time.
Over the past five years, the BSE Sensex has delivered positive returns to investors four times on Budget day, with the benchmark witnessing its most significant rally of 5 percent in the closing trade in 2021.
Except for February 1, 2020, when the 30-share BSE benchmark concluded 987.96 points or 2.42 percent lower, the index closed in positive territory on Budget day in 2023, 2022, 2021, and 2019.
Interim Budget 2024 Live Updates
Finance Minister Nirmala Sitharaman is scheduled to present the interim Budget on Thursday.
"We anticipate that Budget 2024 might not bring significant shifts in the stock market or investor portfolios, but it's crucial to closely analyze any key announcements for their market impact. This year, market dynamics are expected to be shaped by political and economic factors, with a clear focus on capital expenditure rather than short-term populist measures," said Suman Bannerjee, CIO of Hedonova, a Paris-based hedge fund.
On the previous Budget day, the BSE benchmark closed at 59,708.08 points, up by 158.18 points, or 0.26 percent.
In 2022, the Sensex surged 848.4 points or 1.46 percent, while in 2021, it rallied 2,314.84 points or 5 percent after the Budget announcements.
"With the recent triumph in state elections, the upcoming interim Budget for 2024 appears to steer clear of grand populist gestures. Instead, the focus would be on maintaining the status quo with a keen eye on policy continuity," according to a report by brokerage firm Sharekhan by BNP Paribas.
"We expect a vibrant narrative around crucial elements such as capital expenditure, the 'Make in India' initiative, and a green energy push," the report said.
In 2020, the BSE benchmark fell 987.96 points or 2.42 percent, and in the prior year, it gained 212.74 points or 0.58 percent.
"2024 appears promising with the markets hitting a new high and economic growth is healthy, especially in the context of a slowdown globally," the report said.
The BSE benchmark reached its all-time high of 73,427.59 points on January 16, 2024.
"As for the markets, we foresee no immediate reaction to the Budget announcement. The announcement comes soon after the Fed announcement on the 31st; hence, the market reaction for the next few weeks will be from a combination of the Budget and the Fed announcement," said Ashwini Shami, smallcase Manager, EVP & Portfolio Manager at OmniScience Capital, a global investment management firm.
On Wednesday, a day before the Budget announcement, the BSE Sensex surged 612.21 points or 0.86 percent to settle at 71,752.11 points.
"Although there would be some buildup of expectations ahead of the vote on account, we think that major policy reforms and announcements may get postponed to the regular Budget due in June/July 2024. Capex and fiscal consolidation path followed in the vote on account would be monitored closely given their impact on growth and interest rates.
"The capital markets may get a little excited ahead of and post the vote on account but may prefer to wait for the general election outcome and the regular Budget before getting very bullish," said Deepak Jasani, Head of Retail Research, HDFC Securities, on what stock markets should expect from this year's Budget.
Agency Inputs
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