Domestic markets close at pre-demonetisation levels; Budget hopes up
Domestic markets closed at levels they were at before Prime Minister Narendra Modi announced demonetisation on November 8, 2016.
On Wednesday, Sensex closed at 27,708.14, up 332.56 points or 1.21%, while, Nifty at 8,602.75, up 126.95 points or 1.50%. On November 8, Sensex had closed at 27,591.14 and Nifty at 8,566.55. Later that day, Prime Minister Narendra Modi had announced the ban of higher denomination currency with immediate effect.
The announcement left the markets bleeding. It took Sensex and Nifty two and a half months to bounce back.
Finance Minister Arun Jaitley will be presenting Union Budget for 2017-2018 on February 1, 2017. With just a week left, domestic markets are likely to remain volatile.
Uptil now, the Annual Budget has been presented on the last day of February month. This year, the government has proposed the advancement of Budget presentation. Moreover, this year, Cabinet in September last year decided to scrap nearly a century-old practice of having a separate railway budget and merged it with the general budget.
In the past three years, the Budget for 2014-2015 was presented on July 10, 2014 after Modi-government came in power in May 2014. The next year, i.e. Budget for 2015-2016 was presented on February 28 and last year it was presented on February 29.
On June 10, 2014, Sensex was trading at 25,583.69, which was a month before the presentation of Budget 2014-15. Just three days before the Budget, on July 7, Sensex had touched 26,100.08, for the first time in anticipation of strong reformatory budget from then new government. However, Sensex had dropped marginally on the day of Budget i.e. July 10, to, 25,372.75.
In 2015, Annual Budget was presented on February 28. Looking at the trend, though the during one month before the Budget was volatile, but, on January 23, Sensex had crossed a milestone of touching 29,000-mark for the first time. On that day it closed 29,272, again showing confidence in Modi government.
After the budget announcement, in the early March, Sensex touched 30,000-mark for the first time cheering the buget policies. But, the domestic market's gains did not last much.
Soon, it cracked and Sensex fell around 24,000-mark in one year. Moreover, just a month before the presentation of Budget, on January 29 Sensex was trading at 24,870.69 and on the day of Budget it was at 23,002.