Will Indian stock market rise or fall further post Budget? Here is a short, medium & long-term trend analysis

Budget Market Performance: The Union Budget has historically played a crucial role in shaping market trends in India. The forthcoming Union Budget for the financial year 2025-26 is anticipated to focus on capital expenditure, driving manufacturing sector growth, and maintaining macroeconomic stability. Budget announcements, traditionally, have had a significant impact on the stock market, influencing sectoral performance based on policy measures and financial allocations introduced by the government.

Brokerage house Emkay Global has analysed stock market performance post Budget across various indices over short, medium, and long-term periods. The study reveals distinct trends in different sectors, providing insights for traders and investors. 

Short-Term Performance (One Week Later)

According to Emkay, most indices exhibit a bullish tendency in the short term, with a higher percentage of positive closes ranging between 55 per cent and 91 per cent. 

The NSE Pharma index emerges as the best performer, with a 91 per cent positive close rate and an overall return of 3 per cent. NSE Media also shows strength, with an 82 per cent positive close rate and a 2 per cent return.

However, not all indices display robust short-term performance. Emkay notes that Nifty Realty and Nifty Oil & Gas indices have weaker momentum, with positive close rates of 55 per cent and 45 per cent, respectively. This suggests that while the broader market exhibits bullishness, some sectors remain under pressure.

Medium-Term Performance (Two Weeks Later)

Emkay’s analysis indicates a decline in the percentage of positive closes across most indices after two weeks, signalling reduced bullish momentum. The PSUBANK index, in particular, sees a significant drop in positive closes from 73 per cent to 36 per cent, with overall return standing at NIL.

Despite the broader slowdown, the NSE Pharma index continues to perform well, maintaining a 73 per cent positive close rate and a 2 per cent return. NSE Metal and Nifty Realty indices display mixed performance, with high average positive returns but lower positive close percentages. These trends indicate that while some sectors sustain their growth, others experience volatility.

Long-Term Performance (One Month Later)

Emkay’s findings highlight that most indices experience further declines in positive closes over a one-month period, with many showing more negative than positive closes. NSE Metal records the highest average positive return of 11 per cent but has only a 45 per cent positive close rate, reflecting heightened volatility.

PSUBANK continues to struggle, registering only a 27 per cent positive close rate and an average negative return of 11 per cent, leading to an overall return of -3 per cent. In contrast, the NSE IT index stands out as an exception, maintaining a 45 per cent positive close rate and an overall return of 2 per cent, supported by a high average positive return of 7 per cent.

Sector-Specific Trends

Pharma and IT Sectors: Emkay notes that these sectors exhibit resilience across all periods, consistently recording strong positive closes and overall returns. The NSE Pharma index, in particular, stands out for its stability and growth.

Banking and Financial Sectors: Bank Nifty and Private Bank indices show moderate short-term performance but weaken over longer periods. PSUBANK, in particular, underperforms in both the medium and long term, registering significant negative returns.

Realty and Metal Sectors: These sectors exhibit high volatility, with substantial swings in average positive and negative returns. Emkay highlights that Nifty Realty sees a steep decline in positive closes, from 55 per cent after one week to 36 per cent after one month.

FMCG and Consumer Discretionary Sectors: These sectors display relatively stable performance but lower overall returns. Over a longer period, they tend to lean toward negative performance.

Overall Market Trends

Emkay outlines key market trends across different timeframes:

Short-Term Bullishness: The market generally performs well in the short term, with most indices showing a high percentage of positive closes.

Medium-Term Neutrality: Over two weeks, performance becomes more mixed, with fewer indices maintaining strong positive momentum.

Long-Term Bearishness: After one month, most indices record more negative closes than positive ones, indicating a broader bearish trend.

Implications for Investors

Emkay suggests the following strategies based on market trends:

Short-Term Traders: Investors focusing on short-term gains may find opportunities in Pharma, Media, and IT sectors, which demonstrate consistent positive performance.

Long-Term Investors: Caution is advised, as most indices tend to underperform over a one-month period. However, select sectors like Pharma and IT may still provide opportunities with careful analysis.

Risk Management: High-volatility sectors such as Realty and Metal present potential for significant gains but also carry higher risks, particularly over longer timeframes.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.