As Finance Minister Nirmala Sitharaman prepares to present the Union Budget, market expectations are muted. Unlike past years when Budget Day often acted as a strong directional trigger for stocks, analysts across brokerages are largely aligned in one view that the Budget is likely to be a low-impact event for equities. That assessment comes at a moment when markets have already turned cautious, with the Nifty down over 2% in January and about 1.5% in the fortnight leading up to the Budget.
The subdued expectations reflect a broader shift in how markets view the Budget's role. Even over the past few years, Budget Day has been a non-event for the domestic stock markets. Data from the last 15 years suggests the Nifty's average Budget Day move is a negligible 0.19%, while the week after the event has delivered returns seven times larger.
According to Arunagiri of Trustline Holdings, much of what drives equity markets today lies outside the Budget's direct influence. Large structural reforms have already been implemented, fiscal consolidation is largely pre-committed, and global factors now play a bigger role in shaping market direction. As a result, the Budget is increasingly seen as a confirmatory event rather than a catalyst for sharp rallies.
What are the expectations?
Jefferies expects the Budget to broadly stay on the path of fiscal consolidation, albeit at a slower pace. The brokerage believes the government may aim to balance growth support with fiscal discipline, but does not expect dramatic policy announcements.
Government capital expenditure is expected to grow at around 10% or more, with a strong tilt towards defence. Non-defence capex growth, however, is seen to remain modest in the 5–10% range. This suggests limited broad-based stimulus for the economy, reinforcing the view that the Budget may not deliver a major market surprise.
Motilal Oswal echoes a similar sentiment, noting that investor expectations are already low. According to the brokerage, markets are not anticipating large or sweeping measures as the government navigates multiple constraints, including fiscal targets and geopolitical uncertainty.
Emkay Global called the Budget a "low-impact event" for Indian equities. The brokerage argues that growth stimulus is already in play through measures taken over the past year, leaving little space for fresh positive impulses.
This restrained outlook comes against a challenging market backdrop. Equity markets have seen selling pressure in recent weeks, driven by a mix of global and domestic factors. Investor sentiment remains weak, participation is thin, and risk appetite has been subdued despite a brief trading bounce in the last few sessions. The rupee has slipped to fresh lows near the 92 mark, while ongoing geopolitical tensions and trade uncertainties continue to weigh on confidence. There is also limited clarity on progress in US trade negotiations, adding to global unease.
Is non-event a good thing?
Analysts suggest it may actually be constructive in the medium term. With expectations already tempered, the risk of sharp disappointment is lower. Even modest, well-targeted measures could be received positively, while fiscal discipline may reassure bond markets and long-term investors.
Motilal Oswal says lowering of expectations could create room for selective positive surprises if the Budget delivers targeted measures that support growth or consumption without undermining fiscal credibility.
"Any new reforms announced are likely to be gradual in nature, with long-term rather than immediate market impact. The composition of capital expenditure, rather than its overall size, is expected to matter more for sector-level stock performance," Emkay said.
From a technical perspective, the market appears to be in consolidation mode. Bajaj Broking expects volatility to remain elevated in the coming week due to the Budget, the RBI policy decision and global cues. The Nifty is seen consolidating in the 25,000–25,500 range, with clear directional movement only emerging on a breakout or breakdown.
Vinod Nair of Geojit Investments notes that while markets showed some resilience mid-week on the back of a favourable Economic Survey, sentiment weakened again ahead of the Budget. Foreign investor outflows, rupee depreciation and concerns over global liquidity conditions have kept risk appetite in check. According to him, markets are likely to remain range-bound, supported by domestic fundamentals but constrained by external uncertainties.
In that sense, a quiet Budget may help stabilise sentiment rather than unsettle it, especially in a market already adjusting to global and domestic headwinds.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times.)
