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Here's a look at how markets have been reacting to budget presentations over the years

Domestic stock markets have witnessed high volatility during most budget announcements in the last 14 years, falling on six occasions and rising on eight

January 31, 2022 / 12:41 PM IST

Finance minister Nirmala Sitharaman will announce the budget on Tuesday for 2022-23 which will likely be a balancing act of supporting growth and maintaining fiscal prudence without major changes in tax rates, analysts say.

The FM will present the budget at a time when global central banks are expected to tighten policy, crude oil price is surging and COVID cases continue to increase. With seven states going into elections this year and five of them gearing up for polls post budget, concerns around this budget turning into a populist one are heightening.

Local equity markets -- Sensex and Nifty -- have fallen over 3500 points and 1000 points, respectively, in the last week as foreign investors remained net sellers for the fourth consecutive month.

The domestic stock markets have witnessed high volatility during most budget announcements in the last 14 years. The equity benchmark has fallen on six ocasions and risen on eight.

Typically the budget presentation day is marked by big swings in equity markets as investors try to make sense of the various budgetary announcements. Last year, both Sensex and Nifty advanced over 5% each as investors cheered a positive budget.

Analysts say volatility in the markets especially on the budget day cannot be ruled out as the government may unveil more measures to lift economic growth which has taken a hit due to the pandemic.