Sensex movement post-Budget may defy trend this year
The stock market has put up a disappointing show in a month after the Budget announcement seven times in the past 10 years, but analysts have opined that this time the government’s move on policy reforms may provide a positive surprise.
An analysis of the market performance one month prior and a month after the Budget announcement in the past 10 years by Morgan Stanley showed that the Bombay Stock Exchange index, Sensex, had been in the positive territory on just three occasions.
“The market may provide a positive surprise since we expect the Finance Minister to deliver a reform-oriented Budget,” the report by Morgan Stanley stated.
Last year, the Sensex had dropped nearly seven per cent a month after the announcement of the Budget on February 29 to 16,300 points from 17,579 points on the Budget day.
Similarly, the years when the market saw a decline a month after the Budget announcement were, 2007( down 0.4 per cent), 2005 (three per cent), 2003 (five per cent), 2002 (2.6 per cent), 2000 (7.5 per cent).
In 2001, the index had plunged the highest by 11.4 per cent a month after the Budget announcement, the data showed.
Despite the history not favouring an upward movement in the market in the month after the Budget announcement, Morgan Stanley’s India strategist Ridham Desai opined that this time history may not necessarily be relevant.