As the highly anticipated Union Budget week begins on Monday, investor sentiment in the equity market will be influenced by Finance Minister Nirmala Sitharaman’s comments. Finance Minister Sitharaman will give her seventh consecutive Union Budget on July 23rd. Last week, the Indian stock market closed practically flat after a period of robust gains, boosted by good global cues and a promising start to the earnings season. However, profit-taking on Friday reversed earlier gains, leaving the Nifty index at 24,530.90, having reached a high of 24,854.80.
Sectoral stocks in FMCG and IT continued to rise last week, while metal, energy, and media stocks fell. Broader indices also fell, dropping between 2.2 percent and 2.9 percent. Interestingly, according to BSE data, the market has historically reacted positively to budgets.
Between 2016 until the last interim budget issued in February, the market generally gained, with the exception of the Union Budget of 2018, which fell from 35,906.66 to 35,066.75, a reduction of 8839.91 points. The largest spike was the day after the Union Budget declaration in 2021, when the Sensex surged by 1197.11 points to 49,797.72, up from 48,600.61 on budget day.
Other substantial increases occurred in 2017 (777.35 points), 2018 (84.97 points), the interim budget in February 2019 (113.31 points), June 2019 (792.82 points), 2020 (136.78 points), and 2021 (1197.11 points). One day following the budget releases, 2022 had 695.76 points, 2023 had 224.16 points, and 2024 had 440.33 points.
Meanwhile, foreign portfolio investors invested Rs 15,420 crore in the Indian equity market, according to statistics from the National Securities Depository. Foreign portfolio investors (FPIs) have increased their net investment to Rs 30,772 crore in July, showing significant buying by foreign investors.