Bulls may reign supreme a day before the Budget. Here's what history suggests

Both Sensex and Nifty have risen over 5% each, reaching record highs in the last one month. This surge is attributed to the policy stability of the new Modi government and optimistic growth-oriented Budget expectations from Finance Minister Nirmal...

By Akash Podishetti, ETMarkets.com | Updated: Jul 19, 2024, 06.10 PM IST

Equity markets had a stellar run in the run up to the Budget 2024 and the bull run is expected to continue one day before the Budget — if history is anything to go by.

Both Sensex and Nifty were up over 5% each, scaling record peaks in the last one month, taking heart from the policy stability of the new Modi government and growth-oriented Budget expectations from Finance Minister Nirmala Sitharaman.

In the last 10 Budgets, Sensex has delivered positive returns six times one day before the Budget, while the index fell on four other occasions, according to a market analysis by ETMarkets.

The data also took into account the market days before the two interim Budgets, including the one presented this year.

The highest return by the index was in 2019, where it rallied 1.87% a day prior to the Budget. The year 2022 was a distant second with a return of 1.47%.

Morgan Stanley believes the Budget is going to be about reducing the deficit, increasing manufacturing share in GDP via fiscal incentives and physical infrastructure, boosting agriculture, increasing female participation in the workforce and further build in social infrastructure for poverty alleviation.

Axis Securities, on the other hand, expects the government to continue with the capex plan announced in the Interim Budget, pegged at Rs 11.1 lakh crore.

How should investors navigate Budget uncertainty?

While Budget proposals will dictate the market in the medium term, the trajectory of monsoon, global cues and foreign flows will also be key factors in deciding the market direction.

Hindustan Unilever, ITC, Hero MotoCorp, Bajaj Auto, SBI, HAL, Hero Motocorp, Ultratech Cement were among some of the top stock ideas from various brokerages in the run up to the Budget.

(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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