12/13 times, Street swung opposite ways on Rail, Union Budget days

The stock market’s reactions to the railway and the Union Budgets tend to be mutually exclusive. If it cheers one, it boos the other — or so data suggest, going back the last 13 years.

The Budget was presented in the evening in the years before that, leaving mavens unable to price in their disappointment or elation on the same day.

There has been a consistent trend in market reactions in the two interim and thirteen routine budgets since the change in timings.

On twelve occasions since 1999-2000, equities have moved in opposite directions on the days of the Railway and the Union Budgets.

Markets have ended with gains on more occasions following the railway Budget than the Union Budget.

Also, Union Budget day moves have seen an average loss of 0.85% compared with a gain 0.62% for the Railway Budget days.
Nirakar Pradhan,  chief investment officer, Future Generali India Life Insurance, said the rail budget has been positive this time as well.

“It was refreshing to see that after a gap of almost nine years, there have been efforts to increase the revenues. Now it’s up to the finance minister to present a budget which will aim to bring down fiscal deficit and provide a clear road map for fiscal consolidation for markets to rally further. If the government doesn’t do so, markets would be disappointed,” he said.

However, abundant liquidity and low expectations would mean that even after such disappointment, the outlook would be neutral to slightly positive, he said.

D D Sharma, independent market analyst doesn’t have high hopes for Friday.

“Unless the government comes out with good set of provisions in favor of economy and corporate India, we may see markets drifting down on budget day,” he said.

The market rose 0.59% on Wednesday after Dinesh Trivedi presented the Railway budget. This is consistent with the earlier trend with nine sessions ending in positive territory out of the 15 railway budgets.

The day of the Union Budget has resulted in gains only on seven occasions.

The Union Budget has also shown a greater propensity for wild swings.

The biggest gains for the Union Budget, and the biggest losses, have both been in excess of 5%.

The stock market rose 5.13% when Yashwant Sinha presented the Union Budget for the year 1999-2000. It fell 5.83% when Pranab Mukherjee allocated capital for 2009-10.

The swings have been less volatile following the presentation of the Railway Budget.

The biggest gain so far has been in 2002, where it rose 2.75%. The biggest loss followed two years later, when it fell 1.85% in 2004.