How stock market reacted to the union budget in the last 11 years

It is impossible for the stock market trader or investor to express the excitement of the budget.

Today Mr. Arun Jaitly is going to present Narendra Modi Government’s 3rd union budget & it would be exciting to watch. This is the first union budget in which railway budget will be included.

When we talk about budgets, everyone has their own expectations. Market cheers whenever the finance minister (F.M) presents business friendly budget and vice versa.

Every trader has a question in mind whether to invest or trade on the budget or not. So, here is the stock market’s historical performance on the budget day.

  • Performance of the Stock Market on the Budget day:

The following table shows the SENSEX return on the budget day in the last 10 years.

(Note: Sensex return is in %)

Stock market was closed on February 28, 2015, the day of Budget announcement. Therefore, data has been taken as on March 2, 2015.

As you can see in the table above, in the last 11 years, budgets failed to cheer the market. Out of 11, only 4 times market was up on the budget day.

The effect of the budget on stock market may last for some months.

Here is an example.

You know the special thing about 1989’s budget. Everyone, from a common investor to the big market players, everyone was bearish on the stock market. They thought that Mr. Madhu Dhanvate’s (then Finance Minister) budget would be concentrated on social things.

But Mr. Rakesh Jhunjhunwala knew that Mr. V. P. Singh, then Prime Minister, was a Thakur, who understands the business very well. In 1983, liberalization was started by V. P. Singh only. Hence he took a bet.

And yes, Rakesh’s logic worked. It was a business supportive budget & then the market went high and high.

Before Madhu Dhanvate’s budget, Rakesh jhunjhunwala’s net worth was Rs. 2 cr. & a month after the budget, it was Rs. 10 Cr. And to your surprise, 5 months after the budget, Mr. Rakesh Jhunjhunwala’s net worth was more than Rs. 40 Cr. It was the start of his career. Today, he is the most respected stock market investor in India. He is also known as India’s Warren Buffett. It was a humble beginning for the big bull. Now in January 2017, he is 53rd richest person in India with a net worth of $2 billion (Rs.13000 Crore Approx.).

This is the most talked budget story in India’s stock market history.

Post Budget Performance of the Stock Market:

The following table shows the post budget return (1 and 3 months post budget return) given by the market in last 10 years. (Note: Sensex return is in %)

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