Immediate impact of union budget announcement on stock market sectorial indices: Evidence from NSE, India

The union budget is perhaps the most watched event in economic policy making in India. Casual empiricism reveals that stock market activity tends to be greatly influenced by the budget. In this paper, we seek to explore the interplay between the budget and the stock market. We have studied the immediate impact of budget on NIFTY index and other sectorial indices. The stock market indices are like a barometer of the market. They help the investors to identify the broad trends of the market. Investors use them before allocating the funds among the stocks. As the present study analyses the reaction of stock market on the budget announcement, this will help investors to invest cautiously. It helps the investors to minimize their overall risk and maximize returns of their investment during this period. The collected data have been analysed by using statistical tools like Mean, Standard deviation, Co-efficient of variance and t-test. All calculations have been done with the help of SPSS and Minitab software. The study shows that the indexes of NIFTY, banking sector, financial service sector, automobile sector, pharmaceutical sector, private sector banks and public sector banks are being affected by the declaration of annual budget. However, the declaration of annual budget has no significant impact on FMCG First Moving Consumer Goods sector, Information Technology sector, media and entertainment sector, metal sector and real-estate sector.