The upcoming week is set to be action-packed for Indian equities, with domestic cues taking centre stage as investors closely track key policy developments. The spotlight will be on Finance Minister Nirmala Sitharaman, who is scheduled to present her record ninth consecutive Union Budget on February 1. Market participants will focus on signals around fiscal discipline, capital expenditure allocations and growth-oriented policy measures.

Post the Budget, attention will shift to the Reserve Bank of India’s monetary policy decision on February 6, especially in the backdrop of cumulative rate cuts of 125 basis points since the start of the last year. High-frequency data, including the HSBC Manufacturing PMI Final, followed by Services and Composite PMI Finals, will also provide insights into the underlying economic momentum. A packed earnings calendar and monthly auto sales numbers are expected to act as additional market triggers.

“With macro fundamentals remaining supportive and policy optimism building ahead of the Union Budget, the medium-term outlook for Indian equities remains constructive despite elevated near-term volatility,” Ajit Mishra – SVP, Research, Religare Broking said.

Historically, Budget Day has delivered mixed outcomes for the markets. Over the past decade, the BSE Sensex has ended higher on seven occasions and lower three times. The benchmark logged its sharpest gain of 5% on Budget Day in 2021, while it recorded its steepest fall of 2.4% on the eve of the 2020 Budget.

A Year-by-Year Snapshot

Budget 2025

Indian equity benchmarks ended Budget Day on a flat and muted note on February 1, 2025, after a highly volatile special trading session. Although markets opened on a positive note and saw sharp swings during the Budget presentation, most intraday gains were erased by the close.

The BSE Sensex edged up marginally by 5.39 points, or 0.01%, to settle at 77,505.96, while the NSE Nifty 50 slipped 26.25 points, or 0.11%, to close at 23,482.15.

Investor sentiment remained cautious as the government’s planned capital expenditure of ₹11.2 lakh crore was perceived as modest and below market expectations. However, FMCG and auto stocks outperformed after Finance Minister Nirmala Sitharaman announced zero income tax on annual income up to ₹12 lakh (₹12.75 lakh including standard deduction) under the new tax regime, boosting consumption-linked sectors.

Budget 2024

Finance Minister Nirmala Sitharaman presented the first full-fledged Budget of the Modi 3.0 government on July 23, triggering sharp volatility. The BSE Sensex ended 73 points, or 0.09%, lower at 80,429.04 after plunging nearly 1,200 points intraday, weighed down by proposals to raise capital gains tax and levy higher taxes on derivatives trading.

Earlier, on February 1, 2024, during the interim Budget ahead of the Lok Sabha elections, markets closed marginally lower amid choppy trade as investors resorted to profit-taking. The Sensex settled down 106.81 points, or 0.15%, at 71,645.

Budget 2023

Markets reacted with mixed sentiment to the Union Budget 2023, with optimism dampened by the Hindenburg-Adani episode and caution ahead of the US Federal Reserve’s policy decision. On February 1, 2023, the BSE Sensex closed 158 points, or 0.27%, higher at 59,708, paring most of its early gains. During the session, the index had surged as much as 1,223 points, or 2%, to 60,773 after the Finance Minister announced measures to boost consumption and capital expenditure.

Budget 2022

Dalal Street gave a strong thumbs-up to Union Budget 2022. The Sensex ended the day 848 points higher at 58,862, after rising nearly 1,000 points intraday to touch 59,032. Sentiment was buoyed by a series of growth-focused announcements made amid lingering pandemic-related disruptions and rising inflation.

Budget 2021

Considered one of the most crucial Budgets in recent history due to the Covid-19 pandemic, Budget 2021 triggered the strongest Budget Day rally in over two decades. Markets surged nearly 5% as the government focused on disinvestment and increased FDI limits in the insurance sector, while leaving direct taxes and capital gains untouched.

The Sensex soared 2,300 points, or 5%, to close at 48,600, while the Nifty jumped 647 points, or 4.74%, to settle at 14,281.

Budget 2020

Markets witnessed one of their steepest Budget Day falls in over a decade on February 1, 2020, after the Finance Minister announced no major relief measures for equities in her maiden Budget. The Sensex plunged 988 points, or 2.43%, to 39,735, while the Nifty 50 dropped 300 points, or 2.51%, to close at 11,662.

Budget 2019

Equity benchmarks ended higher on Interim Budget Day in 2019, presented by then Finance Minister Piyush Goyal. Markets cheered proposals to raise the income tax exemption limit to ₹5 lakh and increase the standard deduction to ₹50,000, alongside a farm- and consumption-focused policy push. The Sensex rose 212 points, or 0.59%, to 36,469, while the Nifty closed just shy of the 10,900 mark.

However, on July 5, 2019, when the Modi government presented its first full Budget after returning to power, markets ended lower, with the Sensex falling 395 points and the Nifty closing near 11,800.

Budget 2018

Presented by late Finance Minister Arun Jaitley ahead of the 2019 general elections, Budget 2018 saw markets react cautiously. The Sensex ended marginally lower by 0.16% after the government reintroduced long-term capital gains tax on equities and proposed higher dividend distribution taxes, dampening investor sentiment.

Budget 2017

Markets rallied sharply on Budget Day 2017, with the Sensex closing 1.76% higher—its best Budget Day performance between 2010 and 2019. Investors welcomed the absence of any changes to long- or short-term capital gains tax.

This year also marked two major structural changes: advancing the Budget presentation to February 1 and scrapping the separate Railway Budget.

Budget 2016

The Union Budget 2016, presented on February 29, failed to meet market expectations. The Sensex declined 0.66% to close just above the 23,000 level, reflecting disappointment over limited reform-oriented announcements.