Benchmark largecap indices Sensex and the BSE100 have had a mixed show on Union Budget days in the last 12 instances, including two interim Budgets. While the BSE Sensex delivered positive returns in the last 3 Budget days, it closed higher in a total six out of 12 instances.
The 30-pack index ended flattish on three occasions while it fell in the remaining instances, data compiled from corporate database AceEquity suggest.
On February 1, the BSE Sensex closed at 59,708.08, up 158.18 points or 0.26 per cent. It 848.40 points or 1.46 per cent on February 1, 2022. Budget 2021 was best Budget for stock market as the BSE barometer surged 2,314.84 points, or 5 per cent, in the single day.
Sensex fell 2.42 per cent on 2020 Budget day; it was down 0.98 per cent on 2019 Budget which was revealed on July 5, 2019. Earlier that year, the BSE index gained 0.58 per cent on the day of interim Budget (February 1, 2019), which was presented by former Finance Minister Piyush Goyal.
The previous interim Budget in 2014 was presented by former Finance Minister P. Chidambaram on February 17. The Sensex settled that day, 97.24 points or 0.47 per cent higher.
In the case of BSE100, the index settled higher in six instances, settled flattish once and fell in five others. This largecap index jumped 4.55 per cent on 2021 Budget day. It edged 0.3-0.6 per cent higher on the days of 2019 and 2014 interim Budgets.
"In recent years, decisions taken in Union budgets have had limited impact on equity markets. However, any announcements with regards to changes in taxation policy, especially on long-term capital gains (LTCG) on equities would be sentiment negative. One of the reasons equity has become a favoured asset class has been its relatively attractive after-tax returns. Any increase in LTCG when valuations are already expensive would be a negative for the markets," BNP Paribas said in its Budget preview note.
The Budget could bring uniform holding period for all securities -- listed and unlisted, for qualification as long-term capital asset, said Sumeet Agrawal, Associate Partner at Economic Laws Practice.
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