Ahead of the Union Budget 2025 on February 1st, investors are bracing for potential market-moving announcements. This year’s Budget carries the weight of expectations for growth-stimulating reforms and pro-consumption measures, all while the government seeks to manage fiscal consolidation.
To provide context for potential market reactions, a report by JM Financial analyzes historical price movements of key sectoral indices following the announcement of the past 12 Union Budgets under the current government, including two interim budgets.
Here are the key patterns outlined by JM Financial of up to 4 weeks after the Union Budget in the past 10 years:
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Nifty: Closed positive (75% probability) with a 1.1% average return over a week.
Nifty Mid-cap: Closed positive (67% probability) with 1.5% average weekly return.
Pharma Index: Outperformed most, closed in green (92% probability) with a 3.2% average weekly return.
Technology Index: Closed positive (75% probability) with a 1.5% average weekly return.
PSU Bank Index: Closed positive (67% probability) with a 3.6% average weekly return.
Overall: Interestingly, none of the sectors have closed in the red with a probability of more than 50%.
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Nifty: Closed in green with a 50% probability and 0.6% average return.
Nifty Mid-cap: Closed in the positive territory with a 58% probability and 0.1% average return.
Sectoral Indices (General): Barring the pharmaceutical index, none of the sectoral indices closed in the positive territory with a probability higher than 65%. The average return in the sector declined from 3.2% as observed on a 1-week basis to 2.1%.
Technology Index: 58% probability of a positive close with a 1.2% average return.
Auto, Real Estate, PSU Banks: 67% probability of negative close, average return between -0.6% and 0%.
Private Banks, Metals, Energy: 58% probability of negative close, average return between -0.4% and 0.7%.
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Nifty: The index, on a 4-week basis, has closed in the positive territory with a 42% probability. The average return stood at -0.9%.
Nifty Mid-cap: The Nifty Mid-cap index has closed in the positive territory with a 50% probability and an average return of -0.5%.
Overall Sectors: None of the sectors have closed in the green with a probability of more than 65%.
CPSE Index: The index has closed in the green with a probability of 58% and an average return of 0.9%.
PSU Banks, Auto, FMCG, Banks, Real Estate: These sectors closed in the red with a probability of 67% each, with average returns ranging from -2.5% to -0.8%.
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These indices closed in the red with a probability of 58% each, with average returns ranging from -1.5% to 0.5%.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
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