Union Budget Day & Market Behaviour: 15 Year Trend Analysis (2011-2025)

The Union Budget remains one of the most significant macro events for Indian financial markets. Budget announcements influence expectations around fiscal discipline, taxation, capital expenditure, and sectoral allocations, often resulting in sharp but short-lived market volatility.

With Union Budget 2026 scheduled for February 1, 2026 (Sunday), we analyse historical market behaviour on Budget Day to understand how investors typically respond and what may matter this year.

• Presentation Date: February 1, 2026
• Day: Sunday (rare occurrence; markets will remain open)
• Finance Minister: Nirmala Sitharaman (9th consecutive Budget)
   

Given global macro uncertainty and domestic growth moderation, markets are likely to be sensitive to fiscal math, capex allocation, and tax policy signals.

The following data shows Nifty 50 behavior on Budget Day for the last 15 years

Here’s an interesting trend in the India VIX, which measures market volatility. On all 15 Budget Days studied, volatility actually went down, with the index falling by an average of more than 9%. This shows that while you feel nervous and uncertain before the Budget, the actual announcements usually calm markets by clearing up doubts rather than creating new ones.

Union Budget 2025 balanced tax relief, growth measures, and fiscal discipline, while markets reacted calmly to the announcements. The Sensex closed at 77,505.96, up just 5.39 points (+0.01%), while the Nifty 50 ended at 23,482.15, down 26.25 points (-0.11%). Benchmark indices showed little movement on Budget Day, indicating that most measures were largely in line with expectations and did not trigger sharp optimism or concern among investors.

On the direct tax front, the Budget provided relief to individuals under the new tax regime. Salaried taxpayers benefited from the Section 87A rebate and standard deduction, which effectively reduced tax liability for those within the ₹12 lakh taxable income threshold.

On the policy and sectoral side, the Budget focused on long-term growth drivers. Agriculture received support through the Prime Minister Dhan Dhaanya Krishi Yojana, while MSMEs benefited from revised qualification limits that allowed them to expand without losing incentives. Infrastructure development continued with a new public-private partnership (PPP) framework aimed at attracting private capital. In financial services, the FDI limit in insurance was raised from 74% to 100%, subject to conditions, to boost capital inflows and insurance penetration.

• Big spending is expected on highways, railways, and urban transport as cities grow and mobility needs rise.
• More airports could be built or upgraded through public private partnerships to improve air travel across India.
• The maritime sector may get attention to strengthen trade routes and port infrastructure.
• Support for local manufacturing and MSMEs could help India reduce dependence on imports and build stronger supply chains.
• Investments in data centres, cloud, and digital infrastructure may position India as a global hub for AI and tech services. 

A key takeaway here for you is, while the event can trigger short term volatility, long term investment decisions are better guided by fundamentals and the broader economic trajectory rather than immediate reactions to policy announcements.

What ultimately drives sustained market performance is the continuity of reforms and the focus on structural growth, not just the headlines from a single day. Historically, the Union Budget has been more about setting direction than creating instant market momentum. Although headline indices have often recovered after initial swings, performance across sectors and the broader market has tended to be more selective.

For you, the pattern is clear. Sentiment may shift quickly around Budget Day, but disciplined strategies like SIP investing are aligned with long term trends and have generally delivered better outcomes once the initial noise fades.