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Budget reactions to markets since last 10 years under 4 different finance ministers

In the past, the Budget has seen a diverse set of reactions, ranging in between both the extremes. With finance minister Nirmala Sitharaman set to present her fifth Union Budget, there are varied expectations from the budget.


With the common man hoping for some relief on the tax front considering the persistent high inflation and the upcoming general elections in 2024, the think tank and corporate houses expect the Budget to continue with its push towards making India a $5 trillion economy with minimal deviation on the fiscal front.

However, the analysis of the Budget day reaction shows that the market lost value six times in the last 10 years, including the interim Budget. The same story repeated itself even on a one-month timeframe post the Budget announcement, with Nifty losing value six times in the last ten years.

Moreover, it is interesting to note that Budget day reaction hasn’t been too extreme, with gains/losses not exceeding 2% in 8 out of the last 10 years. Further, on a one-month timeframe post the Budget announcement, gains/losses have not exceeded 6% in seven out of the last ten years.

Below is a brief about the Budget day reaction for each of the last 10 years:

Budget 2013
In 2013, led by the UPA government, then finance minister P Chidambaram presented the Budget on February 28. It failed to impress the Street, registering the worst Budget day performance since 2009. On the Budget day, Nifty ended lower with a loss of around 2%.

Budget 2014
A new government was elected in 2014, led by the BJP, and then finance minister Arun Jaitley presented its first Union Budget on July 10. On the Budget day, Nifty witnessed a minor selloff, closing the session with a loss of 0.2%.

Budget 2015
Then finance minister Arun Jaitley presented its second Budget in February 2015. The market reacted marginally positive to the Budget and ended the session with a gain of 0.7%. However, post Budget, Nifty witnessed a selloff and declined by about 4.6% in a month.

Budget 2016
The Budget 2016 proposals fell short of market expectations, which was announced by Arun Jaitley on February 29. On the Budget day, Nifty closed with a marginal loss of 0.6%. Post Budget, sentiment turned positive where Nifty witnessed a strong rally of more than 10% in the month, registering the largest gains since 2011.

Budget 2017
In this year, the government ended its tradition of presenting a separate Railway Budget and negated the practice of presenting the Union Budget at the end of February and shifted it to February 1. The market responded positively, and ended the budget day with a gain of 1.8%, the highest budget day gain between 2011-2020.

Budget 2018
Then finance minister Arun Jaitley presented his final budget on February 1 and it was the first Union Budget after the implementation of the Goods and Services Tax (GST). The Budget failed to cheer up the street and the Nifty closed on a cautious note with a minor loss of 0.2%. The sentiment turned negative as the Budget failed to meet market expectations, leading to a decline of 6% in Nifty in a month, the second worst month between 2011-2021.

Budget 2019
In Budget 2019, Nirmala Sitharaman became the new finance minister and the first full time female finance minister in India. However, the Union Budget failed to impress the street as she failed to provide clarity on the major announcements made by the acting finance minister in the interim budget. The Budget was presented on July 5 and Nifty closed with a loss of 1.1%. The sentiment continued to deteriorate, with Nifty losing 8% in a month after the budget announcement, the worst month between 2011-2021.

Budget 2020
Finance minister Nirmala Sitharaman presented its second Budget on February 1. The market showed a thumbs down for the second consecutive Union Budget, with Nifty closing lower by 2.5% on the budget day.

Budget 2021
After two consecutive disappointing budgets, Nirmala Sitharaman presented her third Budget, where the street gave a big thumbs up and Nifty delivered the best budget day gains since 1999. This was the first time that the Indian Union Budget was presented digitally in a ‘Made in India’ tablet device due to the ongoing Covid-19 pandemic. The budget was presented on 1 February and Nifty settled on a strong note, ending the day 4.7% higher.

Budget 2022
Finance minister Nirmala Sitharaman delivered the budget on 1 February. The Nifty rose for the second consecutive time on the Budget day and welcomed the Budget 2022 with great vigour. The Nifty closed the budget day session on a cheerful note, rising 1.4%. However, the sentiment turned sour and the Nifty saw the fourth worst month between 2011-2022, shedding 4.5%.

(The author is Head of Research at Stoxbox)

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)

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