Budget 2023: Sensex, Nifty Down 3% in Jan; Analysts Share Trading Strategy for Budget Day

Stock Market Today: Benchmark indices, Sensex and Nifty have shed close to 3 per cent so far in January and all eyes are on the big Budget day, that will decide the near-term course of action for markets. The Dalal Street will also keep a close watch on the Federal Reserve’s 2023 FOMC press conference of Chair Jerome Powell.

Surge in volatility with decline in prices ahead of the Union Budget suggests some sort of concern in the market. India VIX has seen spurt in the last three trading sessions from 13.30 to 19 zones and hovering at the highest levels of the last 15 weeks.

Any favourable announcement that can boost economic growth, private investment, or consumption is likely to be cheered by investors on Dalal Street, and lead to a positive reaction from retail investors. Meanwhile, if the Budget announcements do not favour any particular sector or do not contribute to boosting income and capital expenditure, stock markets could react negatively and plummet.

How Nifty moved from Budget to Budget in last 8 years

Neeraj Chadawar, Head  – Quantitative Equity Research, Axis Securities, told News18.com, “In the last 8 budget sessions of the current government, Nifty closed positively on 5 occasions on a Budget day while closing on a negative note for the rest 3. This time around, the Union budget has gained utmost importance as the tightening monetary policy and elevated inflation have challenged the purchasing power of a significant section of people in the country.”

Stocks/Sectors to watch on the Election Day

“Overall, with its focus on growth and development, this Budget may have something for everyone. FMCG, Infrastructure, Manufacturing, MSME, Railways, and Banking are a few sectors that may see action,” Chadawar suggested.

What are investors expecting from Budget 2023?

As this is the last full-year Budget before the Union Election in 2024, we expect it to be growth-oriented. The primary focus of the Budget is likely to be on job creation and investment-driven growth. While relaxation in the LTCG tax will be a plus for retail investors, a relief in the corporate tax structure can help attract more investments. The real estate sector may get a boost with some announcements to expand the current income tax benefit for housing. Measures to stimulate rural spending and infrastructure development would be the highlight in the Budget. Any roadmap to build and bolster the entrepreneurship culture can promote self-reliance and go a long way in employment generation.

Investor Strategy for Budget Day 2023

Santosh Meena, Head of Research, Swastika Investmart Ltd., said: “Even while the budget is a key event for the stock market, investors shouldn’t base their decisions on it heavily until there has been a material shift in policy for a particular industry. The Indian stock market has a positive long-term prognosis since the government is taking the proper steps to speed up economic growth. As a result, investors should continue to hold high-quality stocks with favourable growth prospects. Investors should only monitor the market on budget days; thereafter, they can adjust their portfolios with a financial advisor’s assistance. We have been bullish on domestic economy-facing sectors for the last two years, and they are likely to continue their outperformance. The recent fall in banks, capital goods, and infrastructure should be taken as a buying opportunity.”

Parth Nyati, Founder, Tradingo, suggests that “budget is a major event for the stock market, and the government is also trying to accelerate economic growth, which will be favorable for the Indian stock market in the long term. Investors should therefore keep holding reputable stocks with promising development potential. Investors should only keep an eye on the market on budget days; after that, they can make portfolio adjustments with the help of a financial counselor. Infrastructure, capital goods, and defense are the priority sectors for both the pre-budget and post-budget.”

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