One trading week to go! How market fared in pre and post Budget weeks

BOB Capital Markets said it analysed Nifty50 returns over the last 10 years for a period starting a week before Budget day and ending a week after the Budget. It also compared the returns to that of S&P500 performance to understand whether global markets did impact domestic sentiment during the period.

“On average over the last decade, Nifty50 delivered returns of just 0.71 per cent compared with 0.88 per cent return for S&P500,” the brokerage said.

While Nifty50 does see volatility on Budget days, the 10-year average Nifty50 return for the day is a mere 0.1 per cent. “This underscores that budget-related moves, if any, tend to cancel each other out over a period,” it said.

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Volatility, however, looks set to rise.
Last year, Sensex witnessed a sharp 5 per cent surge on Budget day and the positive momentum continued for the five sessions that followed. But that momentum was seen after six days of back-to-back fall — five with more than 1 per cent cuts — in the run up to Budgets.

Sensex had fallen 3.44 per cent in five sessions in the runup to the Budget 2020. That included a 2.42 per cent plunge on Budget day. That underperformance, however, got reversed within a week, with the Sensex rallying 3.53 per cent over the next five sessions. Finance Minister Nirmala Sitharaman had tabled the Budget on February 1, 2020.

In 2019, Sitharaman had presented the first Budget of Modi 2.0 on July 5. While Sensex edged up 0.3 per cent in week to the Budget (including a 0.9 per cent drop on Budget day), it dropped 1.96 per cent in the week that followed.

Anand Rathi in a recent study said the market, on balance, slid before and on the Budget day, only to recover later.

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