Budget 2024: Will smallcap, midcap stocks turn volatile on D-Day?

Midcap and smallcap indices and the broader BSE500 index performed mixed in the last 12 Budget days, with the maximum gain and fall on any of the three indices seen by BSE500 index at 4.16 per cent and 2.56 per cent, respectively, data  compiled from corporate database AceEquity suggests.

In the case of the BSE Midcap index, the index gained over 1 per cent on three instances, and fell in roughly three others. The BSE Smallcap index advanced over 1 per cent in two but fell over 1 per cent in three instances. The broader BSE500 index climbed 1-4 per cent on three occasions but declined over 1 per cent in two

Pranav Haridasan, MD and CEO, Axis Securities said the impact of the Union Budget on the stock market has reduced notably over the past few years, with the government undertaking most of the reforms outside the purview of the Budget.

Last year, all three indices settled lower on the Budget day. On February 1, 2023, the BSE500 index fell 0.62 per cent, the BSE Midcap index 0.96 per cent, and the BSE Smallcap index 1.10 per cent. The three indices gained 0.9-1.3 per cent in 2022 and 2-4 per cent on the day of Budget 2021. In 2020, the three indices fell over 2 per cent each. A 2.57 per cent fall for BSE500 on February 1, 2020 was its worst Budget day fall, at least, in the last 12 Budget days, including two interim Budgets. The three indices fell over 1 per cent each in 2019.

Net-net, the BSE500 index and the BSE Smallcap index rose in seven of those 12 instances, the BSE Midcap index ended higher in six of those instances.

On February 1, 2024, "The Interim Union Budget is unlikely to see any big-bang announcements. However, policy intent is likely to be made clear through the selective allocation of resources and thrust towards rural development, employment generation and capacity building through infrastructure development," said YES Securities.

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