Historically, the market is known to be cautious ahead of the Union Budget.
The average one-month Sensex
return one month before the Budget
has been a negative four per cent since 2006. Moreover, Sensex
return a month ahead of the Budget
has been negative in all the past 12 instances. Defying odds, the market has been upbeat in the run-up to the Budget
this time around. The Sensex
has gained 2.3 per cent since January 1 and six per cent since December 26. Market players say share prices are rallying on sky-high expectations from this year’s Budget.
The government is expected to take steps to offset economic shocks caused by demonetisation or note ban. “The unfavourable impact on private investment appetite would need to be offset through higher public spending in FY18 Budget
and faster resolution of policy hurdles,” says Elara Capital.