How Different Market Sectors React To Budgets2 min read
Union Budget 2022 is around the corner and markets are eagerly waiting for it as they do each year. The activity in markets (turnover) generally increases around the budget days and peaks on the day of Budget.
Over the years, markets have responded differently to the budgets introduced by the Union Government. The market expectations keep building up during the pre-budget sessions and in the post-budget sessions, the stocks react to the policy changes that have been announced.
You can read more about the market expectations from the Budget in our previous blog post- Budget 2022: What Does The Indian Stock Market Expect?
In the below image we tried to capture the returns from 15 days before the day of budget to 15 days after the day of budget for all the top sectors in Nifty 50.
During the last 10 years, the best performance of Nifty was captured during the 2021 budget season and the worst was recorded during the 2019 season with 7.23% and -3.49% movement respectively. But different sectors react differently when compared to the broad market.
Although the Nifty was up by record percentage during the 2021 season, IT, media and FMCG stocks have underperformed and delivered negative returns. On the other hand, in 2015 Nifty gave a return of negative 2% but pharma stocks have outperformed and gave almost 6% returns in the same time period.
The financial services sector is typically one of the top performers around the budget month and has been in the top 3 performing sectors over the last 6 years. For the last four Budget seasons, the media sector has always ended up eroding investor’s wealth.
So one has to carefully watch out the sector-related announcements during the Budget and invest wisely.
On Budget Day, we will be bringing you the highlights and helping you make sense of the announcements. Do watch this space for more!
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