Indices track global cues

Benchmarks have fallen 5 times in the past 10 Budget days.

The impact of the Union Budget on stock market movements seems to have lessened in recent years as the key benchmark stock indices also take global cues into account to determine the course for the day. During the past 10 years, the benchmarks have fallen in six on the Budget day.

Ten years ago, the then BJP-led NDA government decided to read the Budget during market hours, breaking the precedent of presenting the budget in the evening, after the market hours.

The biggest rise occurred in the Bombay Stock Exchange's Sensex in 1999 when the index shot up 5.13 per cent as investors cheered the Union Budget by Yashwant Sinha. But, the next year as the investors went on a spelling spree, the Sensex shed 293.71 points, or 5.12 per cent, to close at 5,446.98.

In terms of points fall, last year's budget by P Chidambaram, who is presenting his seventh Union Budget tomorrow, saw stock prices going into a tailspin. The downward trend was mostly in line with a fall in global markets on that day on unwinding of yen-carry trades, which forced global investors to sell stocks in emerging markets including India.

The Sensex fell by 540.74 points (down 4.01 per cent) to 12,938.09 on that day, before sanity returned to the markets in the following days after analysts found various positive steps in the Budget.

"Budget is still an event for the stock markets. Though global cues may have some say on our markets, we expect the Budget to be the most important economic event for our markets," said Shriram Iyer, executive vice-president, Edelweiss Capital.

"Normally, it takes one or two days to understand the Budget. This time around, the market movement based on the Budget could only be gauged on Monday as the Budget comes on Friday. Analysts and legal experts have two days to study various proposals before the market opening on Monday," said an analyst with another local brokerage house.

In the last four Budgets by Chidambaram, the market went up twice and on the other two occasions, the Sensex fell, giving no clear signals from an investors' point of view for this year.