Budget & Markets: Stocks deliver positive returns 1-month after, shows data

Nifty races ahead with a 5.7% average gain post-Budget, outpacing pre-Budget dips

The one-month post-Budget period is generally favourable for equity markets, as indicated by analysis of Budgets over the past decade by US-based brokerage Bank of America (BofA).

Out of 11 occasions, the benchmark National Stock Exchange Nifty saw positive returns in eight instances, with average one-month gains of 5.7 per cent.

In comparison, the market ended with gains in six instances and losses in five instances one month before the Union Budget, averaging a negative return of 0.2 per cent. However, this time, market sentiment appears more exuberant, with the Nifty rising 5 per cent over the past month.

Analysts are optimistic about the Budget focusing on capital expenditure (capex), moderate populism, and prudent fiscal deficit targets.

“We expect allocations of $6.6 billion to stimulate state capex, $9.6 billion towards populism to boost consumption, and no change to the fiscal deficit target of 5.1 per cent for 2024–25,” said Amish Shah, managing director and head of India research at BofA, in a note.

Ahead of the Budget on July 23, Shah forecasts benefits for staples, automotive (potentially boosted consumption), and sectors geared towards capex, such as mortgage finance, power, industrials, cement, and metals.