As India Awaits Budget 2026 This Sunday, A Look Back at Market Reaction to Budget 2025

New Delhi: The Union Budget is the most closely-watched space for market enthusiasts. This is because the government's slightest intentions as presented in this crucial document can send strong signals to Dalal Street, prompting the markets to either reward retail investors big time by soaring high, or take them down with its deep plunge. Market performance is a crucial indicator for governments to judge how well its budget has been accepted by investors and it has even led governments in the past to roll back their decisions, seeing the markets punishing them.

In this context, let us take a look back at how the Union Budget was accepted by the markets in 2025, when Union Finance Minister Nirmala Sitharaman presented her eighth consecutive Budget. It should be noted that the 2025 Budget was presented just before the Delhi elections and the government rolled out big-ticket tax reliefs for the middle classes. Exempting annual income up to Rs 12 lakh from taxation, restructuring tax slabs, insurance sector reforms, reduction of duties on intermediaries, and fiscal push for welfare schemes were the main highlights of Sitharaman's Budget 2025.

How Markets Reacted in 2025

When Sitharaman started off her speech in February 1, 2025, markets initially opened in a positive mood, however as soon as she completed her speech, volatility set in. While the 30-share BSE Sensex settled at just 5.39 points higher at 77,505.96, NSE Nifty dipped 26.25 points to 23,482.15. The Sensex declined 494.1 points to 77,006.47, and the Nifty fell 162.35 points to 23,346.05.

Bajaj Finserv, UltraTech Cement, Larsen & Toubro, Power Grid, Tata Steel, and State Bank of India were the major underperformers in Sensex; Zomato, Maruti, ITC, Mahindra & Mahindra, and Titan were the top gainers.

The Sensex had climbed 136.44 points to 77,637.01, the NSE Nifty rose 20.2 points to 23,528.60, when the market opened at 9:15 am. However, at around 12:36 pm, when Sitharaman was wrapping up her speech, BSE Sensex was at 77,072.56, down 428.01 points; Nifty50 was at 23,361.75, down 146.65 points. On the other hand, Nifty Smallcap 100 went up by 0.41%, but the Nifty Midcap 100 fell by 0.42%. 

Positive movements were observed in major FMCG stocks including Hindustan Unilever Limited, Godrej Consumer Products, Trent, Voltas, ITC, and DMart. The BSE FMCG Index also increased by 4.86%.

A Sector-Wise Analysis 

As the nation prepares for another Union Budget this Sunday, let us take a look at how different sectors performed in the market when Budget 2025 was announced: 

Defense: A major plunge was observed in the defense sector on February 1, 2025. Some defence stocks even plunged down by 8% after the budget speech, despite the government allocating Rs 4,91.732 crore to the sector. However this year, things may turn out to be different as this Budget comes after Operation Sindoor.

Railways: Railway stocks fell by over 6%. This may have been due to a lack of significant announcements for this sector in 2025.

Telecom: It was widely expected that telecom stocks like Bharti Airtel, Reliance Jio, and Vodafone Idea would stand to benefit owing to favourable announcements in this sector.

Manufacturing: Reliance Industries and Siemens India, pioneers in the manufacturing sector, were expected to benefit in 2025, owing to emphasis on the domestic manufacturing sector in the Union Budget.

Banking: Banks, like HDFC Bank and Axis Bank, were expected to benefit from a credit flush in 2025, owing to the Kisan Credit Card (KCC) scheme.

Aviation: Aviation stocks like Indigo, GMR Airports and Spice Jet rose a slight deal, thanks to the modified UDAN scheme announced last year.

Footwear: Footwear stocks also rallied after a scheme was announced in 2025 to support the footwear and leather sector.

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