Markets are not kind to budgets; despite tax relief, the Sensex ends flat

It’s difficult for finance ministers to make the markets happy when it comes to budgets. A Moneycontrol analysis shows that bourses have trended lower after the budget presentation on 13 of the last 21 occasions.

Nirmala Sitharaman, however, could escape the curse of markets closing lower on Budget day, as the BSE Sensex ended 5.4 points higher on  February 1. The Finance Minister, in her eighth budget, provided relief to tax filers by increasing the tax exemption limit to Rs 12 lakh.

The government has also kept up the pace of capex  with the target set at Rs 11.21 lakh crore, nearly 10 percent higher than the revised estimates of FY25.

On July 23, 2024, the Sensex closed 73 points lower at 80,429.04. The interim budget in February 2024 had witnessed a 106.8 point dip.

The first full budget of a new government has usually witnessed a dip in the markets. In February 2020, Nirmala Sitharaman’s first budget saw a 2.5 percent decline in the market.

Pranab Mukherjee was the worst affected Finance Minister (FM), with a 6.14 percent decline in the Sensex on July 6, 2009.

But the incumbent FM’s track record is no better than the previous one. Sitharaman has faced a negative reaction from the markets following five of her eight budgets, while former FM Arun Jaitley got the thumbs down in four of his five budgets, and  Mukherjee witnessed dips in three of the five budgets he presented.