Budget 2025: Sensex, Nifty settle flat, in line with past few Budgets; what's next?

Benchmark stock indices Sensex and Nifty settled flat on the Budget day, in line with the past few Budgets. If we were to go by history, chances are the two indices may see positive momentum next week, though as the dust settle, focus may soon shift to the dollar movement, foreign flows and domestic earnings.

On Saturday, the BSE Sensex rose 5.39 points or 0.01 per cent to settle at 77,505.96. The BSE barometer had declined 0.09 per cent on July 23, 2024 and 0.15 on February 1, 2024. It gained 0.27 per cent on February 1, 2023. 

Similarly, Nifty settled Saturday's session at 23,482.15, down 26.25 points or 0.11 per cent. The NSE barometer edged 0.12 per cent lower on July 23, 2024 Budget and 0.13 on February 1, 2024. It was up 0.26 per cent on February 1 2023. 

Data compiled by SBICAP Securities showed the average return for Sensex and Nifty in the 14 past Budget days were 0.38 per cent and 0.32 per cent, respectively. The next day returns, post Budgets, were mixed for both indices in the past three Budgets and averaged 0.28-0.29 per cent in the 14 Budgets. 

Another report by Emkay Global suggested most stock indices including Nifty showed a higher percentage of positive closes, ranging from 55 per cent to 91 per cent, in the first week post Union Budgets. It said one-week traders may benefit from focusing on sectors like pharma, media, and IT, which have historically showed consistent positive performance in the short term. The ones with over on-month investment horizon should be cautious, as most indices tend to underperform over a one-month period. Sectors like pharma and IT may still offer opportunities to them, but careful analysis is required, the brokerage added.

On Budget 2025, Navneet Munot, MD & CEO at HDFC Asset Management said that the simplification of tax structure and ease of compliance should aid in investor confidence and stimulate both, domestic and foreign investments. "While short-term volatility could be par for the course due to the current global economic backdrop, the long-term direction rooted in policy prudence and support for growth should bolster Destination India’s credentials for foreign and domestic investors alike."

Motilal Oswal, Group MD & CEO, Motilal Oswal Financial Services Ltd said: “The overall budget is managed with a fine balance between growth and fiscal prudence. The fiscal deficit is packed at 4.4 per cent below the long-term target of 4.5 per cent, which will be positive for the economy."

What's next?

"Talking about the Sensex & Nifty, in the 7 days following the budget, both Sensex and Nifty have been positive 9 out of 14 times, with an average gain of 2.5-3 per cent. They have been negative only 5 times, with an average loss of 1.75-2 per cent," SBICAP Securities said.

For the 90-day timeframe, the results are even better. Both Sensex and Nifty have been positive 9 out of 14 times, with an average gain of 11.5-12 per cent. They have been negative only 5 times, with an average loss of 6-7 per cent, the brokerage added. 

Jefferies in a note on January 30 expected Nifty to bottom out before February 7. It expected rate-sensitive stocks to do well in the expected near-term rally. Jefferies said the recent correction was the second longest of the 10 corrections in the last 10 years. At 15 per cent, the current correction is in line with the average corrections, it said.