Over the past 10 years, just when the Union budget is around the corner, Indian equity markets have made wild swings.
The years 2020, 2016 and 2014 witnessed extreme volatility—from declines to advances, and vice versa—a month or a week before and after the budget.
Capital expenditure targets, disinvestment plans, fiscal deficit, budgetary allocations to sector-specific schemes like housing and railways, and tax policies—especially on capital gains—are some of the factors that influence the markets.
On the day of the budget, markets reacted positively on five occasions. They witnessed gains the following day on seven such sessions.
The 50-share Nifty saw its highest advance in 2021, while the previous two years saw the benchmark index decline.
Finance Minister Nirmala Sitharaman will table the interim budget in the Parliament on Feb. 1.
Though no major policy announcements are expected, considering the nature of the budget, experts expect the Modi government to continue high allocations to sectors like infrastructure and defence, while maintaining fiscal discipline and towing the downward glide path on the deficit target.
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