February has traditionally been a tricky month for Indian equity markets, largely because it coincides with the Union Budget. Despite expectations usually running high, market data from the past decade suggests that February has more often than not delivered negative returns.
Nifty 50: February Hasn’t Been Kind Historically
Looking at the last 10 years, the Nifty 50 has closed February in the red seven times, with the average return declining 1.9%. Sharp corrections of more than 5% were seen in 2016, 2018, 2020 and 2025, highlighting that budget-related volatility can sometimes turn into meaningful downside.
This historical pattern suggests that while budgets may bring short-term excitement, markets often struggle to sustain gains through the month.
Midcaps And Smallcaps Face Bigger Swings
The pressure tends to be even more pronounced in the broader market. Over the last 10 years, the Nifty Midcap 100 and Nifty Smallcap 100 closed February in the red eight times each.
On average, midcaps declined 2.2%, while smallcaps fell a steeper 4%. Corrections of more than 5% were recorded in 2016, 2018, 2020, 2022 and 2025, underlining the higher volatility and risk appetite shifts typically seen during the budget month.
Sectoral Performance: Mostly Negative Across The Board
Sectoral indices also show a mixed-to-negative trend in February. No sector has managed to consistently outperform over the last decade.
- FMCG ended February in the green only two out of 10 times, with an average return of -2.7%.
- IT, Auto, Bank, Metal and Pharma indices each closed in the green just three times, with average returns ranging from -0.5% to -3.8%.
- Energy and Real Estate performed relatively better, closing in the green four times each, though average returns still remained negative at -1.6% and -3.1%, respectively.
Overall, the data suggests that even defensive sectors struggle to escape broader market weakness during the budget month.
Stock-Level Winners And Losers
At the individual stock level, only a handful managed to buck the trend. Just two stocks closed February in the green seven times with gains of more than 5% over the past decade. They are: Blue Star (7%) and Cholamandalam Finance (6%).
On the flip side, weakness was widespread. Nineteen stocks closed February in the red seven times with losses of over 5%. The top laggards include PNB (down 10%), Sammaan Capital (8%), Union Bank (8%), REC (7%) and NBCC (7%), reflecting stress in PSU and capital-heavy names during volatile periods.
January 2026 Sets A Weak Starting Point
Adding to the caution, January 2026 saw the Nifty fall 3.39%, marking its worst January performance since 2016. A weak start to the year often leaves markets more vulnerable to further volatility, especially around major policy events like the Budget.
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