Will Sensex, Nifty see a Budget-day rally today?

Equity markets started the Budget week with solid gains on Monday as supportive global cues, and anticipation of a populist Budget drove investors towards Dalal Street.
The S&P BSE Sensex surged over 1,000 points to 58,248 levels, while the Nifty50 index moved up 300 points to 17,407 levels in intra-day deals.
The indices, however, ended at 58,014 and 17,340 levels, rising 814 and 238 points, respectively.
As all eyes will be on Budget proposals today, let’s look at past data to know if equities could rally post the Budget or will they see profit booking?
 
An analysis by Business Standard’s Research Bureau shows that, 38 budgets have been presented since 1991.
Markets, on their part, have risen and fallen almost equal number of times.
The Sensex index has clocked a post Budget rally 50% of the times, while the Nifty index has ended in the green 58% of the times.

Meanwhile, market reaction to Modi govt’s Budget has largely been positive. Stock markets have mostly rallied strongly post the Union Budget and have risen 58% of the times.

This time around, too, analysts expect bulls to give a tough fight to bears. Let’s go to Gaurang Shah, senior vice-president at Geojit Financial Services to know what the markets are baking in?

So, if markets were to rally today, should one sell on rise?
 
According to the annual Economic Survey, tabled in the Parliament yesterday, India has the fiscal space to do more to support the economy, poised to wrest the title of the world’s fastest-growing major one from China and keep it for at least another two years.
Moreover, according to the document, gross domestic product is expected to grow by 8%-8.5% in the year starting April after likely expanding 9.2% in the current year.

If one is to take cues from the Economic Survey about today’s likely proposals, then the govt is expected to drive growth by widespread vaccine coverage, gains from supply-side reforms and easing of regulations, robust export growth, and availability of fiscal space to ramp up capital spending.
Given this, Sampath Reddy, Chief Investment Officer at Bajaj Allianz Life Insurance says, “The Union Budget to be growth-oriented with emphasis likely to be on sectors like manufacturing, healthcare, and infrastructure. Given the governments’ commitment towards climate, we expect the electric vehicles (EV) segment to get an additional boost with specific incentives for the charging infrastructure. Moreover, as the direct and indirect tax collections are picking up, we except the government to achieve its budgeted fiscal deficit target for FY22. The government has already announced National Monetisation pipeline, PLI schemes and increased outlay for capex, and we expect that the thrust to continue going forward as well.” 
 
Overall, today’s proposals will be the key market drivers over the next few days with stock-specific action amid Q3 results and global cues swaying indices. 

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