Budget 2026: The Union Budget has consistently been one of the most influential events shaping the Indian stock market, often triggering sharp price movements and heightened investor anxiety. Budget Day is typically associated with elevated volatility, and historical data reinforces this perception.
Looking at the past 25 years of February 1 Budget sessions, the Indian equity market moved more than 1% on 16 occasions, highlighting how rare subdued Budget Day reactions have been.
While policy announcements dominate headlines, market experts argue that the real opportunities may not lie in reacting to Budget Day moves but in understanding the broader market behaviour surrounding the event.
“Union Budget days tend to attract disproportionate attention, but historical data suggests that the real market story often unfolds after the Budget rather than on the day itself. Budget day itself is rarely the opportunity. Historically, patience pays. Volatility before the Budget often creates positioning opportunities, while the period after the Budget has delivered more consistent returns. For investors, reacting less and positioning better has mattered far more than predicting Budget headlines,” said Apurva Sheth, Head of Market Perspectives and Research, SAMCO Securities.
The Union Budget 2025 is scheduled to be presented in Parliament by Finance Minister Nirmala Sitharaman on February 1 at 11 am. Despite falling on a Sunday, Indian stock markets will remain open, making this a rare Budget Day trading session. Given historical trends, market participants are bracing for sharp intraday swings as the Budget continues to be a key driver of investor sentiment.
Market behaviour ahead of Budget
Market behaviour ahead of the Budget has also followed a recognisable pattern. According to market data, the Nifty 50 has often exhibited caution in the week leading up to Budget announcements, reflecting uncertainty and profit-booking. Rahul Sharma, Director and Head of Technical & Derivative Research at JM Financial Services, highlighted that this trend has been persistent over long periods.
“Over the past 15 years, the average return for Nifty one week before the budget has been negative at -0.52%,” Sharma said.
The data shows that during this 15-year period, the Nifty closed higher in the week before the Budget on only eight occasions. This aligns with broader trends, where the index posted negative returns in the month preceding the Budget in four of the last five years, including a decline in January 2025. Between 2010 and 2022, markets often traded lower ahead of the event due to fears of policy surprises, even though post-Budget rebounds were common, with an average gain of 1.36% in the following week. Elevated uncertainty is also reflected in the average 2.65% intraday trading range seen on Budget Day itself.
Nifty 50: Budget Days Trends
A closer look at Budget Day performance over the last decade reinforces the pattern of volatility without clear directional consistency. In the previous Budget session on February 1, 2025, Indian indices witnessed sharp swings before closing weak. The Nifty ended down 0.11%, marking the third consecutive Budget where the index closed in the red but with a move of less than 1%. In 2024 and 2023, the Nifty closed 0.15% lower and 0.2% lower, respectively.
In contrast, 2022 saw the market end 1.4% higher, while 2021 delivered a sharp 4.7% rally on Budget Day. The volatility was on full display in earlier years as well, with the market falling 2.5% in 2020 and 1.1% in 2019. Going further back, the Nifty was nearly flat in 2018, down 0.1%, after a 1.8% rise in 2017 and a 0.6% fall in 2016.
Nifty on Budget Days
| Year | Nifty rise/fall on Budget Day (%) | Year | Nifty rise/fall on Budget Day (%) |
|---|---|---|---|
| 2025 | -0.11 | 2012 | -1.1 |
| 2024 | -0.15 | 2011 | 0.5 |
| 2023 | -0.2 | 2010 | 1.3 |
| 2022 | 1.4 | 2009 | -5.8 |
| 2021 | 4.7 | 2008 | -1.1 |
| 2020 | -2.5 | 2007 | -3.8 |
| 2019 | -1.1 | 2006 | 0.2 |
| 2018 | -0.1 | 2005 | 2 |
| 2017 | 1.8 | 2004 | -3.1 |
| 2016 | -0.6 | 2003 | 1 |
| 2015 | 0.6 | 2002 | -4 |
| 2014 | -0.2 | 2001 | 4.3 |
| 2013 | -1.8 |
Over a longer 25-year period, the market closed lower on Budget Day on 15 occasions, with the steepest decline of 5.8% recorded in 2009. Among the ten positive Budget sessions, gains exceeded 4% twice—once in 2021 and earlier in 2001.
In 2021, the indices surged by 4.7%, while the last instance of a similar rally occurred in 2001 when the market advanced over 4% on budget day.
What should investors do?
Given this backdrop, experts urge caution over impulsive Budget Day trades. Sharma warned that volatility remains elevated and risks persist across multiple fronts.
“Budget day volatility remains high, with possible potential sell-offs if stimulus falls short or fiscal targets slip, potentially raising bond yields and tightening liquidity. Geopolitical tensions, currency fluctuations, and global trade disruptions pose external threats, while domestic execution delays in policies could erode investor confidence. Overvaluation concerns, FII outflows, and an AI bubble burst are additional headwinds that might derail Nifty’s rally toward 29,000 in 2026. Investors are advised to maintain cash positions until post-budget clarity emerges, focusing on sectors like defence and PSU Banks for selective opportunities,” Sharma of JM Financial Services advised.
Meanwhile, expectations for the Union Budget 2026 centre on balancing fiscal prudence with growth support amid global headwinds such as U.S. tariffs, geopolitical uncertainty and trade disruptions. Key anticipations include higher capital expenditure on infrastructure, defence and railways, support for MSMEs, manufacturing, green energy, AI and exports, and a fiscal deficit projected at 4.4% of GDP, alongside a focus on job creation and rural demand.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
