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How Nifty 50 Reacts to Union Budget This Year

How Nifty 50 Reacts to Union Budget This Year
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The Union Budget is one of the most anticipated financial events of the year. It shapes economic policies and impacts stock market trends. Historically, the market exhibits heightened volatility around Budget announcements, driven by investor expectations, fiscal measures, and policy changes. With Budget 2025 set to be unveiled, let’s examine how the Nifty 50 index has performed in the days leading up to and following previous Budget presentations and what analysts and India Inc. expect this year.

Historical Performance of Nifty 50 Around Budget Days

A review of Nifty 50’s closing levels on January 31 (or the last trading day before Budget) and February 1 (Budget Day) over the past five years reveals mixed reactions: 

YearJanuary 31 Closing LevelFebruary 1 Closing LevelAbsolute ChangePercentage Change
202012,129.5011,661.85-467.65-3.86%
202113,634.6014,281.20646.600.05%
202217,339.8517,576.85237.000.01%
202317,662.1517,616.30-45.85-0.26%
202421,725.7021,697.45-28.25-0.13%
Source: NSE India, Fortune India, Economic Times, Business Today, Hindustan Times)

Key Takeaways on Performance During Budget

Market experts suggest that the Budget’s impact on equities hinges on policy announcements related to fiscal deficit, taxation, infrastructure spending, and industry incentives. Analysts expect Union Budget 2025 to focus on:

1. Capex-driven growth: Increased allocation towards infrastructure, manufacturing, and green energy projects.

2. Fiscal discipline: Measures to maintain fiscal prudence while supporting economic expansion.

3. Middle-class benefits: Potential tweaks in tax slabs or rebates to enhance disposable income and consumption.

4. Sector-specific incentives: Favorable policies for auto, real estate, IT, and banking sectors to boost investor sentiment.

According to a report by the Economic Times, the market could witness positive momentum if the Budget clarifies economic growth drivers and incentives for key industries. Conversely, unexpected fiscal tightening or a lack of stimulus measures may trigger selling pressure.

What India Inc Expects from Union Budget 2025?

Corporate leaders are keenly watching Budget 2025, anticipating reforms that will drive long-term growth. Some key expectations include:

  • Incentives for Manufacturing & Exports: Policies to enhance India’s position as a global manufacturing hub, including production-linked incentives (PLI) and tax relaxations for exporters.
  • Infrastructure Push: Increased capital expenditure to bolster roads, railways, ports, and urban development, focusing on public-private partnerships.
  • Tax Reforms: Simplification of tax structures, potential rationalization of GST rates, and corporate tax relief to improve ease of doing business.
  • Ease of Doing Business: Further digitalization and streamlining compliance requirements to support MSMEs and startups.
  • Sustainability Focus: Renewable energy incentives, carbon credit policies, and green financing measures to accelerate India’s transition to a low-carbon economy.
  • Banking and Financial Reforms: Strengthening of banking regulations, incentives for fintech innovation, and measures to boost credit availability for small businesses.
  • Healthcare & Education Investment: Increased funding for healthcare infrastructure and skill development programs to enhance workforce productivity.
  • Technology & AI Investments: Support for artificial intelligence, semiconductor manufacturing, and R&D in emerging technologies to position India as a global innovation hub.
  • Agricultural Reforms: Boosting rural income through modernized farming techniques, better supply chain management, and increased MSP support for farmers.
  • Startups & Digital Economy: Policies that incentivize startups and tech-driven enterprises through tax exemptions, venture capital funding, and reduced compliance burdens.

    Industry leaders believe that a well-balanced Budget can propel India’s growth while maintaining investor confidence in the equity markets.

    What to Expect on Union Budget on 1st Feb 2025?

    With past trends indicating heightened market volatility around Budget announcements, investors should brace for potential swings in the Nifty 50. If the Budget aligns with expectations on growth, tax reforms, and fiscal prudence, markets may rally. However, any surprises or policy shifts could trigger short-term corrections.

    The key for investors is to analyze long-term economic implications rather than react to immediate market fluctuations. As we await Budget 2024, staying informed and aligning investment strategies with macroeconomic fundamentals will be crucial. *(Sources: NSE India, Economic Times, Business Today, Hindustan Times, Fortune India)

    Is the Stock Market Open Tomorrow on Union Budget Day?

    The Indian stock markets, including the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE), are open on weekdays from 9:15 AM to 3:30 PM IST, and usually shut on weekends. However, tomorrow, Saturday, February 1, 2025, being the budget day, the stock market will be open between 9:15 AM to 3:30 PM IST.

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    I’m Archana R. Chettiar, an experienced content creator with
    an affinity for writing on personal finance and other financial content. I
    love to write on equity investing, retirement, managing money, and more.

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