On February 1, 2025, the Indian stock market experienced a significant downturn ahead of the Union Budget announcement. The BSE Sensex fell sharply by approximately 750 points, closing at 80,604.65, while the Nifty50 dropped below 24,550, ending at 24,530.90, marking declines of about 0.91% and 1.09%, respectively[1]. This decline was attributed to extensive selling as investors reacted cautiously to the upcoming budget expectations.
Despite the initial optimism earlier in the day, when both indices showed some gains due to hopes for growth-stimulating measures in the budget, the sentiment quickly shifted. Analysts had anticipated that the budget would focus on personal income tax cuts and capital expenditure increases to boost consumption and economic growth[2][4]. However, concerns about fiscal constraints and a high fiscal deficit limited expectations for substantial relief measures[4].
Market analysts noted that this correction was part of a broader trend, with the Nifty facing its second-longest correction in a decade. Jefferies reported that this correction has lasted for 126 days and is expected to stabilize soon if no unexpected tax changes are introduced in the budget[5].
Overall, while there was initial optimism regarding potential budget announcements that could stimulate growth, the market's sharp decline reflects investor caution and uncertainty about the government's fiscal strategy moving forward.
With inputs from agencies
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