With the Union Budget 2026-27 days away, Indian equities are under siege from pre-event nerves. Archival data from 2010-2022 underscores the trend: Nifty posts -0.52% average weekly returns pre-budget, positive only 8 times in 15 years. Fear of abrupt policy tweaks—tax hikes, subsidy cuts—triggers this ritualistic dip.
Volatility spikes dramatically, hitting 2.65% intraday on D-day. Over the past five years, four pre-budget months saw Nifty declines, including a sharp January 2025 drop. Post-budget, however, markets rebound with 1.36% average weekly gains as surprises unpack.
JM Financial’s Rahul Sharma anticipates growth-oriented measures balancing books amid global headwinds like US tariffs. Emphasis on capex for infra, defense, railways aims to insulate growth. Sectors like MSMEs, manufacturing, renewables, AI, exports seek boosts via quick refunds, logistics push.
Fiscal deficit targets 4.4% GDP, supporting $5T vision through jobs, rural uplift, green initiatives. CARE Ratings corroborates, projecting FY27 at 4.2-4.3% with hefty borrowings ahead.
Headwinds include lofty P/E ratios, foreign sell-offs, tech bubbles, forex flux, trade frictions, and red tape. Budget shortfalls could amplify selling, straining rates and liquidity. Advice: hoard cash, pivot to resilient defense and PSU banking stocks for now.