Budget Announcement Sparks Initial Surge in Stock Market, Followed by Decline: Analyzing the Impact of Finance Minister Nirmala Sitharaman’s 2025-26 Budget Speech
The unveiling of the Union Budget for the fiscal year 2025-26 by Finance Minister Nirmala Sitharaman elicited a swift and notable response from India’s financial markets. Initially, the BSE Sensex climbed by 136.44 points, reaching 77,637.01, while the NSE Nifty rose by 20.2 points to 23,528.60. However, this upward momentum was short-lived, as both indices experienced subsequent declines, with the Sensex dropping 300 points and the Nifty slipping below the 23,450 mark.
Sectoral Performance Post-Budget
In the aftermath of the budget presentation, market performance varied across sectors:
- Gainers: Companies such as ITC Hotels, IndusInd Bank, Mahindra & Mahindra, Sun Pharma, UltraTech Cement, and NTPC registered gains by midday, reflecting investor optimism in these sectors.
- Decliners: Conversely, stocks of Titan, Kotak Mahindra Bank, Nestle, Asian Paints, HCL Tech, and ICICI Bank faced declines, indicating a cautious or negative outlook from investors in these areas.
Market Sentiment: Expectations vs. Reality
The initial enthusiasm observed in the markets can be attributed to anticipations of growth-oriented measures within the budget. However, the subsequent downturn suggests that the budget may not have fully met investor expectations. Analysts, including V.K. Vijayakumar, Chief Investment Strategist at Geojit Financial Services, opined that while the market was seeking substantial growth-promoting initiatives, the budget’s focus appeared to be more on capital gains and tax adjustments. Vijayakumar emphasized that the trajectory of the market in the medium to long term would be influenced by trends in growth and income improvement.
Adani Group Stocks: A Case Study
The budget’s emphasis on bolstering the infrastructure sector had a pronounced impact on stocks related to the Adani Group:
- Adani Power: Observed an initial surge of 4%, reflecting investor confidence in the company’s prospects following the budget announcements.
- Adani Green: Experienced a 3.52% increase in early trading, indicating positive market sentiment towards the company’s future.
- Adani Enterprises: By midday, shares had risen by 2.46%, further underscoring the favorable reception among investors.
Analyzing the Market’s Volatility
The market’s initial surge followed by a decline underscores the complex interplay between investor expectations and budgetary provisions. While the budget did introduce measures aimed at stimulating growth, such as tax reliefs and increased capital expenditure, some investors felt that these initiatives fell short of delivering the anticipated booster dose to the economy. This sentiment was reflected in the mixed performance across various sectors and stocks.
