Market volatility on Budget day: Here's what Zerodha's Nikhil Kamath says

Zerodha co-founder Nikhil Kamath on Thursday analysed what the sentiments of retailers, and brokers trading on Indian bourses during and after the government's Budget will be like. The Union Budget for the financial year 2022-2023 is set to be presented by Finance Minister Nirmala Sitharaman on February 1, at 11 am.

In a series of tweets, the co-founder of True Beacon and online broking start-up Zerodha, stated that although he was not the biggest fan of technical analysis, he still shares some data on market movement on the day of the Budget.
 

Attaching market data charts, Kamath explained that post-Budget event, the expectations of market volatility is seen in only 8 out of the last 22 years, where the markets have moved lesser than 4 per cent plus or minus in the post-budget month.

In a second chart, the Zerodha co-founder went on the explain that on Budget day, in only 5 out of 22 years have the markets moved under 1 per cent.

He also stated that in 14 out of 22 years (63 per cent) the pre-existing trend has reversed post budget (pre-budget month vs post budget month).

"Historically pre-budget month has a positive bias whereas post-budget month has a negative bias," Kamath concluded.

The Budget session of Parliament is set to kick off on Monday, January 31, 2022, with President Ram Nath Kovind addressing both the houses. The session will be held in two parts – the first part of the session would conclude on February 11, 2022. After a month-long recess, part two of the session would begin on March 14, 2022, and conclude on April 8, 2022.

With just a few days left, several economists, companies, tax experts and India's salaried class have eyes on the Budget with hopes that Sitharaman would provide relief on various sectors, including income tax, GST rates, home loans, and more, as per their expectations.

Meanwhile, Indian stock markets on Thursday declined in line with global cues after the US Federal Reserve signalled to steadily tighten policy starting from March 2022. Global markets have been volatile amid hawkish US Fed and rising geopolitical tension.

The benchmark Sensex was trading at 56,805.17 points at around 11 am, which is 1052.98 points or 1.82 per cent lower from its previous day's close at 57,858.15 points.

The broader Nifty 50 of the National Stock Exchange tumbled 1.89 per cent or 327.25 points to 16,950.70 points against its previous session's close at 17,277.95 points.

The 10-year yield hit 25-month today after the Fed Chairman Jerome Powell signalled a March interest rate hike and sustained policy tightening to control surging inflation. The Indian rupee also fell to a one-month low against US dollar amid broad strength in the greenback.