Equity markets typically stay quiet on Budget day and face selling pressure beforehand, per Samco Securities’ historical data. The 2026 Union Budget looms as a crucial event for markets battered by worsening global factors. Looking at data since 2010, both Nifty 50 and Nifty Bank show muted and inconsistent reactions on the Budget day. Samco data shows that the average Budget day move stands at just 0.19% for Nifty and 0.42% for Nifty Bank, reinforcing the idea that Budget day volatility is more noise than signal.
“Union Budget days tend to attract disproportionate attention, but historical data suggests that the real market story often unfolds after the Budget rather than on the day itself,” said Apurva Sheth, Head of Market Perspectives and Research, SAMCO Securities. Despite being a Sunday, India’s stock markets will be open for trading on February 1, the day when the Union Government will present the Budget for 2026.
Sheth added that outcomes vary widely across years, driven by positioning and expectations rather than announcements alone. The pre-Budget phase, however, tells a clearer story. As per historical data, markets tend to turn cautious ahead of the event and on average, backward returns are marginally negative (Nifty −0.46%, Nifty Bank −0.03%), indicating profit-booking and risk reduction as uncertainty peaks. The post-Budget phase is where conviction returns. Forward returns improve meaningfully, with the Nifty averaging +1.35% and Nifty Bank +1.69%.
“Once policy clarity emerges, markets shift focus back to liquidity, earnings, and growth visibility rather than headline announcements...Volatility before the Budget often creates positioning opportunities, while the period after the Budget has delivered more consistent returns. For investors, reacting less and positioning better has mattered far more than predicting Budget headlines,” said Sheth.
The run-up to this year’s budget so far has been highly negative. In the week gone by, the Nifty registered losses of around 2.5% and so far in January the benchmark index is down 4.3%.
India’s equity market is having a turbulent start to 2026 with US President Donald Trump’s foreign and tariff policies denting investor sentiment. Sharp depreciation of the rupee to record lows, FII selling and earnings delivery falling marginally short of expectations have added to the worry.
Vinod Nair, Head of Research, Geojit Investments said that market direction in the budget week is likely to be driven by global macroeconomic signals and domestic fiscal expectations.
“Investors will closely track guidance from the Fed on the trajectory of interest rate cuts, while positioning may be influenced by anticipation surrounding the Union Budget, particularly any measures aimed at easing external trade pressures and supporting capital flows. With the Q3 earnings season still underway, stock-specific movements are expected to remain prominent,” added Nair.