Budget Day Market Movement History in India: How Does Market Perform on Budget Day?

Investors, traders, market analysts, and corporate leaders are keeping an eye on the stock market on Finance Minister Nirmala Sitharaman's presentation of the Union Budget 2026 on Sunday 1st February. This budget will lay down the economic roadmap for the country in the financial year 2026-27. 

History of Market Movement on Budget Days

Union Budget 2026:

The Union Budget for FY 2026-2027 was presented by Finance Minister Smt. Nirmala Sitharaman on Sunday, February 1, 2026. This historic session marked the first time a Union Budget was presented on a Sunday, requiring a special trading session for the Indian stock markets.

The market reaction was sharply negative, characterised by a significant sell-off following the announcement of a hike in the Securities Transaction Tax (STT) on derivatives. The Nifty 50 ended the session down 593 points (-2.33%) at 24,825.45, while the Sensex plunged 1,843 points (-2.23%) to close at 80,722.94.

Here's a breakdown of the key changes and their impact on different sectors:

1) Agriculture and Rural Development:

The government launched "Bharat-VISTAAR," a multilingual AI tool designed to provide customised advisory support to farmers to improve productivity and reduce risks. Additionally, the Lakhpati Didi program's success led to the launch of “She MARTS” retail outlets run by women self-help entrepreneurs to boost rural commerce.

2) MSMEs and Startups:

A dedicated ₹10,000 crore SME Growth Fund was introduced to identify and support "Champion SMEs." To further assist micro-enterprises, an additional ₹2,000 crore was allocated to the Self-Reliant India Fund, ensuring continued access to risk capital for small businesses.

3) Infrastructure and Capital Expenditure:

The government significantly increased the capital expenditure (Capex) outlay by 9%, reaching ₹12.2 lakh crore for FY27. Key projects include:

• High-Speed Rail: Seven new high-speed rail corridors were proposed.
• Waterways: 20 new National Waterways to be operationalised over the next five years.
• Logistics: Expansion of the Dedicated Freight Corridor linking the East Coast to the West.

4) Energy and Power:

A major Nuclear Energy Mission was announced with the goal of developing 100 GW of nuclear power by 2047. The budget allocated ₹20,000 crore for R&D into Small Modular Reactors (SMRs). To support the EV ecosystem, customs duties were removed on critical minerals like cobalt and lithium-ion battery waste.

5) Financial Sector and Taxation:

This sector saw the most significant market impact due to the STT hike:

• Derivatives Tax: STT on Futures rose from 0.02% to 0.05%, and on Options from 0.1% to 0.15%.
• Income Tax Act 2025: The government confirmed that the new, simplified Income Tax Act would come into effect on April 1, 2026.
• Foreign Investment: The limit on individual foreign investors buying Indian stocks directly was doubled from 5% to 10%.

6) Healthcare and Pharmaceuticals:

The budget introduced "Biopharma SHAKTI," a strategy with a ₹10,000 crore outlay to establish India as a global biopharma hub. It also exempted customs duty on 17 life-saving medicines and proposed the creation of five regional medical hubs to promote medical tourism.

7) Technology and Innovation:

India Semiconductor Mission (ISM) 2.0 was launched to fortify supply chains and encourage industry-led research. The Electronics Components Manufacturing Scheme saw its outlay increased to ₹40,000 crore to boost domestic high-tech production.

Union Budget 2025

The Union Budget for FY 2025-2026, presented by India's Finance Minister Smt. Nirmala Sitharaman introduces several measures to boost India’s economic growth, productivity, and sustainability across various industries. These changes are likely to affect multiple sectors, and the overall market indices have performed on Budget day as Nifty 50 ended down at 26.25 points, or -0.11%, at 23,482.15 amid volatility on Saturday and Sensex ended positive 5.39 points, or 0.01%, at 77,505.96, after the Union Budget 2025-2026 was presented.

Union Budget 2024

After the Union Budget 2024 announcements, the Indian stock markets began to decline significantly, as the government proposed raising taxes on capital gains and derivatives trading. The NSE Nifty 50 and S&P BSE Sensex dropped about 1% each. The Indian rupee also fell to a record low against the US dollar to 83.69.

In the Union Budget 2024, the Central government has slashed customs duties but also increased the capital gain taxes for the financial year 2024-25. Short-term gains on financial assets will now be taxed at 20%, up from 15%, while long-term gains on all assets face a 12.5% tax, up from 10%. The exemption limit has been increased to Rs. 1.25 lakh from Rs. 1 lakh per year for long-term capital gains. 

Financial Minister Nirmala Sitharaman said the standard deduction for salaried employees will be hiked to Rs.75,000 from Rs.50,000 under the new income tax regime, and the government has also changed the tax slabs for FY25. 

Market analysts said the government's decision to hike the LTCG tax will discourage savings and investment. Gaurav Bora of Laksh Financial Solutions told The Indian Express, “Just when the stock market has been having a good run for a long time, the news dampened the spirits… It is an unnecessary move.”

Union Budget 2023

On February 1, 2023, Finance Minister Nirmala Sitharaman presented a budget aimed at strong public finances and a robust financial sector. The market had mixed reactions, with the Sensex rising over 1,100 points during intraday trade but closing only 158.18 points higher at 59,708.08. In contrast, the Nifty 50, however, fell by 45.85 points to 17,616.30. 

Union Budget 2022

Finance Minister Nirmala Sitharaman's 2022 budget aimed to lay the foundation for economic growth post-pandemic. Key announcements included measures for 5G, digital currencies, and infrastructure development, agriculture, education, and more. The market reacted positively, with the Sensex rising 849.40 points to 58,862.57 and the Nifty 50 up 237 points to 17,576.85. Gains were seen across sectors such as pharma, FMCG, metals, IT, and realty. 

With cuts on customs duties and incentivised exports, textile stocks jumped post the budget announcement. However, auto, oil, and gas stocks dropped. Due to the higher fiscal deficit, bond yields surged by 15-20 bps, and treasury gains were negatively wedged for PSU banks. 

Union Budget 2021

On February 1, 2021, Finance Minister Nirmala Sitharaman presented a budget to revive the pandemic-hit economy. Major announcements included a Development Financial Institution with Rs 20,000 crore capital, incentives for digital payments, Jal Jeevan Mission for universal water supply, More than one lakh crore for railway expenditure, the highest ever capital outlay of Rs 1,18,101 crore to the roads and highways ministry, a tax holiday for startups extended till March 31, 2022, and a voluntary vehicle scrapping policy. 

The market responded positively, with the BSE Sensex surging 2,314.84 points to 48,600.61 and the NSE Nifty 50 jumping 646.60 points to 14,281.20, marking the best budget day performance in the last 20 years.

Union Budget 2020

Finance Minister Nirmala Sitharaman presented her second budget on February 1, 2020, introducing new tax slabs and lower rates. There was no significant boost for industry in the budget speech. Optional income tax cuts and no relief from LTCG painted Dalal Street red, as the market witnessed its biggest fall on February 1 since 2009, with the Sensex crashing 2.43%, closing just below 40,000, as investors lost around Rs 3.6 lakh crore on BSE.

Union Budget 2019

In 2019, two budgets were presented. Finance Minister Piyush Goyal presented the Interim Budget on February 1, maintained existing tax slabs and announced benefits for low-income taxpayers and farmers. The Budget 2019 announcements, such as an increased Defence Budget for FY20 to Rs 3 lakh crore, and income tax sops for nearly 30 million low-income taxpayers and 120 million marginal farmers, provided a significant boost to sentiment. 

Agriculture and auto stocks also got a boost after favourable announcements for farmers. The acting FM kept the fiscal deficit target at 3.4% of GDP. The market responded positively, with the Sensex rising 212 points to 36,469.43 and the Nifty 50 gaining 62.7 points to 10,893.65.

Later, Finance Minister Nirmala Sitharaman presented the budget on July 5. She left some of the significant announcements made by the acting finance minister, Piyush Goyal, in the interim budget unchanged.  The market initially dropped by 980 points during the day but recovered slightly to close down 394.67 points. The Sensex ended down 0.99%, and the Nifty 50 fell by 135.60 points. Regarding adverse reactions, experts note that a few announcements were not well received by investors, such as raising income tax for HNIs, no mention of the fiscal deficit, and a proposal to increase public shareholding to 35%. 

Union Budget 2018

It was the last budget of Arun Jaitley as the Finance Minister. The budget had major proposals for MSMEs, employment generation and infrastructure. The government pegged the fiscal deficit at 3.3% of the GDP. Long-term capital gains tax was introduced in the Union Budget 2018-2019. 

The market reacted cautiously, and sentiment turned weak due to a proposal to raise the dividend distribution tax on higher earners and a proposal to increase the Securities Transaction Tax on options and the dividend tax on dividend receipts above Rs 10 lakh. Sensex ended marginally lower by 0.16% on that day, marking it as the eighth fall in the last 10 years of budget announcements. 

Union Budget 2017

The budget presentation date was moved to February 1  2017, and the separate Railway budget was merged with the Union budget. Finance Minister Arun Jaitley announced relief for middle-class taxpayers and a proposed fiscal deficit of 3%. It resulted in positive market reactions. 

Increased tax collection on account of demonetisation and reduction in the tenure of long-term capital gain tax from 3 years to 2 years were among the major moves that helped markets end on a positive note that day. The BSE Sensex finished at 28141.64, up 485.68 points. It gained 1.76% on the day, the highest gain on the budget day since 2010. The NSE Nifty 50 rose 155.10 points and closed at 8716.40 points.

Union Budget 2016

On February 29, 2016, Finance Minister Arun Jaitley presented a budget focused on rural development, including a plan to double farmers' income in five years. Despite these measures, the market was unimpressed, with the Sensex losing 0.66% and closing just above 23,000.  

No increase in service tax, no change in capital gains tax, and the failure of the PSU bank recapitalisation fund to enthuse markets. Jaitley stuck to the fiscal deficit target of 3.5% of GDP for fiscal 2016 -17.

Union Budget 2015

On February 28, 2015, Finance Minister Arun Jaitley presented a budget aimed at boosting investments while maintaining fiscal discipline, targeting a fiscal deficit of 3.9% for 2015-16. Key measures included a corporate tax cut to 25%, deferral of GAAR, and efforts to boost rural incomes. 

The market responded positively, with the BSE Sensex rising 141.38 points to 29,361.50 and the NSE Nifty advancing 57 points to 8,901.80. However, the Nifty declined by 4.6% the following month.

Union Budget 2014

In 2014, due to the election year, two budgets were presented. Finance Minister P. Chidambaram of the Manmohan Singh government presented the budget on February 17, which received a positive market response. The BSE Sensex rose by 97.20 points to 20,464.06, and the Nifty 50 gained 24.95 points to 6,073.30. 

Later, Finance Minister Arun Jaitley of the newly elected government presented the budget on July 10. The budget increased investment and exemption limits for taxpayers and raised the FDI limit in the defence and insurance sectors from 26% to 49%. The market saw a minor selloff, with the Sensex declining by 0.28% and the Nifty 50 dropping by 17.25 points.

Union Budget 2013

In 2013, the UPA government, led by Finance Minister P. Chidambaram, presented the budget on February 28. The budget proposed higher taxes for wealthy individuals and companies, introducing a 10% surcharge on those earning more than Rs 1 crore annually and on companies with revenues over Rs 10 crore. 

The market reacted negatively, with the Sensex dropping 1.52% or 291 points to end below the 19,000 level. The market also disliked the higher revenue projections from divestment and spectrum sales, despite a reduction in the Securities Transaction Tax on mutual fund and equity futures transactions.

Conclusion

The Union Budget 2025-2026 is designed to promote growth across key sectors such as agriculture, infrastructure, renewable energy, healthcare, and finance. Investors should pay attention to these areas when making decisions about stock market and mutual fund investments. Sectors such as infrastructure, renewable energy, fast-moving consumer goods (FMCG), and financial services are expected to do well, and thematic funds focused on these sectors might offer good returns.

Also Read: 
1. Budget 2025 Highlights
2. Budget 2025 live updates
3. Budget 2025 Full List of Schemes Announced
4. Budget 2025 Full List of Cheap & Costlier Items
5. Union Budget 2026: Sector-Wise Impact on the Stock Market & Mutual Funds