Why Budget day returns are mostly muted; should investors bet on a post-Budget rally?  

Stock investors hoping for a pre-Budget rally are in for a disappointment, with benchmark index NSE Nifty tumbling about 4 per cent in January amid geopolitical tensions. While all eyes are on Budget 2026, market participants said surprises from Budgets have been diminishing over the years, as most major policy decisions are increasingly taken outside the Budget.

They do not expect any major surprises or sharp market moves in Budget 2026, especially after two consumption-oriented fiscal stimuli: income tax relief for the middle class in the previous Budget, followed by a broad-based downsizing of GST slabs.

Data showed Nifty has delivered a modest average return of 0.19 per cent on Budget days since 2010. The NSE benchmark delivered modest negative returns ranging between 0.11 per cent and 0.13 per cent in the past four Budgets of 2025 (FY26), 2024 (interim and full FY25) and 2023 (FY24), as per data compiled  by Samco Securities. 

The widely tracked banking benchmark Nifty Bank delivered an average return of 0.42 per cent on Budget days over the same period, data showed. 

Ajit Mishra of Religare Broking said expectations from Budgets have usually remained low over the past few years, given the government’s initiatives spread throughout the year and a limited policy arsenal amid a focus on fiscal prudence. Mishra said selective support could be seen for certain sectors, particularly export-driven ones that have been hit by tariffs and defence, but a broad-based market rally looks unlikely, he said.

Mishra said the challenging part is on the earnings front. He said the market was expecting a strong Q3 results season, but actual numbers have been mixed. He noted that while other currencies have been appreciating against the dollar, the rupee has been weakening. “We don’t see any major sharp move amid a lack of decisive earnings support. Selective buying may continue,” he said.

Maulik Patel, head of research at Equirus Securities, said a sharp knee-jerk rally is unlikely, though volatility may ease after the Budget. “Markets are already pricing in policy continuity. A rally would need positive surprises on capex or fiscal math,” he said.

Chirag Jain, chief executive officer at Ashika Credit Capital, also said a sharp, across-the-board rally looks unlikely. “But once the Budget-related uncertainty fades, markets could move up in a more selective, fundamentals-driven way. Policy consistency and fiscal discipline will matter more than big headline announcements,” he said.