New Delhi, January 25 (IANS). Only a few days are left for the presentation of the Union Budget 2026-27. If we take a look at the past years, as the budget day approaches, uncertainty increases in the stock market.
Data from 2010 to 2022 show that the market often trades with a decline before the budget. The biggest reason for this is the fear of sudden changes in government policies. However, recovery is often seen in the market after the budget.
According to market experts, the stock market has seen an average increase of 1.36 percent in the week after the budget.
One reason for the weakness of the market before the budget is high volatility. According to statistics, an average intraday fluctuation of 2.65 percent is seen in the stock market on the budget day.
It has been observed in the last 15 years that the average return of Nifty in the week before the Budget has been negative by 0.52 per cent. During this period, Nifty closed with gains only 8 times.
This trend has also been visible in recent years. In four out of the last five years, the Nifty has been in decline in the month before the Budget, including the decline in January 2025.
Rahul Sharma, Head of Technical and Derivatives Research, JM Financial Services, said that from the Union Budget 2026, it is expected that the government will promote economic growth while maintaining fiscal balance. Additionally, global pressures such as US President Donald Trump’s tariff policies will also be taken into account.
According to experts, the budget may focus on increasing capital expenditure in infrastructure, defense and railways, so that the country’s economy can be protected from external shocks. It is also expected that the defense budget will increase.
Industry organizations demand that MSME, manufacturing, green energy, artificial intelligence and exports should be promoted and for this steps like faster GST refund and investment in logistics can be taken.
The expert further said that the fiscal deficit is estimated to be 4.4 percent of the GDP. Also, a target has been set to make India a 5 trillion dollar economy by emphasizing on employment generation, rural demand and sustainable development.
However, some risks also remain. There may be sharp fluctuations in the market on the budget day. If the budget does not provide relief as expected or fiscal targets are disrupted, selling may increase, leading to higher interest rates and a shortage of money in the market.
Additionally, geopolitical tensions, rupee fluctuations and global trade disruptions may also impact the market. Delay in implementing policies within the country can also weaken investor confidence.
Experts have also warned that high stock market valuations, FII selling and bursting of AI bubble are some of the additional headwinds that could derail Nifty’s rally towards 29,000 level this year.
Experts have advised investors to keep some cash safe till the situation becomes clear after the budget and focus only on selected sectors like defense and public sector banks (PSU banks).
At the same time, CareAge Ratings estimates that the fiscal deficit will be 4.4 percent of GDP in FY 2026.
The report also says that the fiscal deficit in fiscal year 2027 could be between 4.2 to 4.3 percent. During this period, the total borrowing of the government is likely to be Rs 16-17 lakh crore and the net borrowing is likely to be Rs 11.5-12 lakh crore.
–IANS
DBP/AS
