Budget 2024: Nifty ends lower for 2nd consecutive year on budget day – a look at how market performed in last 15 years

Budget 2024 Day: After starting the session on a positive note, Indian indices turned volatile to end in the red on Thursday, February 1, post the budget presentation.

Ahead of the budget, BSE Sensex jumped 399 points to its day's high of 72,151.02 while Nifty advanced 107 points to 21,832.95. However, both benchmark indices shed almost a percent each from their intra-day highs after the announcement to their respective intra-day lows.

The Sensex ended 106.81 points or 0.15 percent lower at 71,645.30. Meanwhile, the Nifty settled 28.25 points or 0.13 percent lower at 21,697.45.

This was the second consecutive time the Nifty was in the red on a budget day and with less than one percent movement.

In the previous budget session (February 1, 2023), Indian indices ended on a mixed note. Sensex closed 158 points, or 0.27 percent higher at 59,708.08 while the Nifty ended at 17,616.30, down 46 points, or 0.26 percent.

Read here: Budget 2024: Bonds rally, yields drop on lower than expected govt borrowings

Before 2023, Indian indices moved less than one percent on the budget day in 2018, when the market ended flat, down just 0.1 percent. In 2022, the market ended 1.4 percent higher, while in 2021, it surged 4.7 percent on budget day. Meanwhile, in 2020, the market fell 2.5 percent and in 2019, it shed 1.1 percent.

As per data since 2010, the Indian market has moved less than 1 percent on the budget day in 7 of the past 15 budget day sessions (Feb 1), including 2024.

In this period, the market has fallen the most in 2020, down 2.5 percent, and gained the most in 2021, up 4.7 percent. This was the highest gain since 2001 when the market moved up by over 4 percent on budget day.

Read here: Budget 2024 Key Highlights: Income tax, infra, EVs and more - 15 key takeaways

Another important point to note is that in the last 15 years (Feb 1 budget), 9 times the market was in the red and it ended in the green in only 6 budget day sessions.

Finance Minister Nirmala Sitharaman tabled the Interim Union Budget for FY25 in the Parliament today. This was the sixth budget presented by the current FM and the last one of Prime Minister Narendra Modi-led government's second term. The full budget will be presented in July this year after the new government is formed post the Lok Sabha Elections.

The budget focused on fiscal consolidation, infra, agri, green growth, and railways. However, no changes were made in the tax rates, which was a disappointment to salaried individuals.

Read here: Budget 2024: Government sets FY25 fiscal deficit target at 5.1% of GDP

Among key highlights, the Fiscal Deficit target for FY25 was set at 5.1 percent of the GDP, better than expected, while the FY24 target was also revised down to 5.8 percent. Meanwhile, the capex target of FY25 was increased by 11.1 percent to ₹11.1 lakh crore.

"The hallmark of this interim Budget is its fiscal rectitude. The fact that the Government has prioritised fiscal consolidation over populism on the eve of general elections is commendable. The fiscal deficit numbers of 5.8 percent in the revised estimates for FY24 and 5.1% for FY25 are better than the most optimistic expectations. This is very good news for the economy and consequently for the market. The boost to housing is another important proposal from the market perspective since this will benefit industries like cement, steel and all construction-related segments," said V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.

Read here: Budget 2024: Mutual fund players call it prudent and not populist

Meanwhile, Sonam Srivastava, Smallcase Manager, Founder - Wright Research, said:

"Budget 2024 brought forth several key announcements aimed at bolstering infrastructure, healthcare, and housing, alongside initiatives to support MSMEs and promote technological advancements in defense. Notably, the commitment to affordable housing through the launch of a new scheme for the middle class and the emphasis on next-generation reforms underscore the government's focus on sustainable development and economic inclusivity. The budget's approach to maintaining stability in tax rates while enhancing the ease of doing business reflects a strategic balance between fostering growth and ensuring fiscal prudence.

The market's reaction to these announcements has been mixed, with positive movements in the FMCG sector, attributed to measures expected to boost consumer spending power. Conversely, railway stocks saw a decline, possibly due to concerns over the execution and immediate impact of the infrastructure projects announced. Overall, the muted market response underscores a cautious optimism, with investors looking for more clarity on the implementation of budget proposals."

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