Nirmala Sitharaman, India’s Finance Minister, made headlines back in September 2019 when she lowered taxes for companies from 30% to 22%. This big decision made the stock market jump, and people started calling the sudden rise in stock prices the “Sitharaman Candle.” It shows how one strong choice can change things quickly in the economy.
Now, India’s economic growth has slowed down, dropping from 8.6% at the end of 2023 to just 5.4% by September 2024. It’s time to focus on individual taxpayers to encourage spending and help the economy grow again. There have been talks about completely changing the Income Tax Act to make it simpler. Even though a full change might take time, taking bold steps can boost the market, especially since it has been doing poorly for the last four months.
Foreign Institutional Investors (FIIs) have been pulling out their money from Indian stocks like it’s a race against time. The Nifty and Sensex indices have dropped nearly 12% from their highest points. If the Nifty closes January on a down note, it will be the fourth month in a row of negative closings—this doesn’t happen often, so after the Budget, we might see a rebound.
We’ve looked at how the market reacted before and after the Budget since 2010. Usually, there’s some pressure on the market a week before the Budget, but it tends to bounce back afterward. Historically, the Nifty shows an average loss of -0.46% in the week before the Budget but gains about 1.35% in the week after. Out of the last 18 Budgets, the Nifty ended positively 12 times after the announcement. Interestingly, whenever the Nifty falls more than 1% before the Budget, it usually bounces back strongly afterward.
So, all eyes are on FM Sitharaman to spark some much-needed confidence and energy back into the markets!
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