Budget 2025-26: Nifty close to breaking 23-year record, will budget be the savior?

Budget 2025-26: Nifty has fallen 3% this month so far and this index is moving towards decline for the fourth consecutive month. Earlier, Nifty had seen a decline for four consecutive months in the year 2001. This has never happened since then. Since 2019, there has been a decline in the stock market in the month of January. Also, in the last 25 years, there have been many occasions when the stock market has given negative returns for three consecutive months.

But the incident of decline for four consecutive months is going to happen for the first time in 23 years. Nifty has fallen 3% this month and is moving towards negative returns for the fourth consecutive month. Earlier, Nifty had seen a decline for four consecutive months in the year 2001. Market in February

Index is moving towards decline for the fourth consecutive month

Rupak Dey of LKP Securities told ETMarkets that before this, the last case of decline in the stock market for four consecutive months came in 2001. Then the Nifty fell by an average of 6% in four consecutive months from July to September and then rose by 5% in the next three months.

Also Read: January may be worst month for the Sensex, foreign investors ruined domestic market

Anand James, Chief Market Strategist, Geojit Financial Services, said that since the year 2000, the Nifty has seen 13 instances of a continuous decline of 3 months. In about 70% of the cases, we have seen an average rise of 3% in the next 3 months.

Budget impact on stock market

The market outlook in February will be mainly influenced by budget announcements, RBI policy, Trump's trade policies, FII inflows and third quarter earnings of companies. But the seasonal trend shows that the month of February has also been historically negative. According to data collected by JM Financial, the index closed with a decline on 6 occasions in the last 10 years with an average return of 1.2%.

In the last few years, the budget impact on the stock market has been on a continuous downward trend. The market remains under pressure a week before the budget, but the market bounces back after the uncertainty ends. Samco Securities said, 'The average return of Nifty a week before the budget was -0.46%, while a week after it was 1.35%. Out of the last 18 budget sessions since 2010, Nifty closed with gains 12 times after the budget.'

It is also worth noting that whenever the Nifty has fallen by more than 1% a week before the budget, it has always bounced back sharply with positive returns after the budget.

What to expect from the budget?

Morgan Stanley analysts say that the market expects tax relief in the budget to boost consumption and increase spending on infrastructure. Analysts will keep an eye on announcements affecting agriculture, housing, railways, defense, electronics, textiles, auto ancillary, food processing and green energy.

Anubhav Aggarwal, strategist at UBS India, believes the budget's impact on markets will be minimal as growth in capital expenditure and consumption could be limited if the fiscal deficit is to be contained below 4.5% of GDP in FY26.