Market trends are anticipated to be influenced by the impending Union Budget 2024–2025, which is anticipated to concentrate on capital spending and macroeconomic stability. According to Emkay Global's report, the pharmaceutical index is leading during a brief period of bullishness, whereas industries like real estate and PSUBANK are facing long-term difficulties.
Budget Market Performance: Historically, the Union Budget has been a significant factor in determining Indian market patterns. Capital expenditure, promoting the expansion of the manufacturing sector, and preserving macroeconomic stability are expected to be the key priorities of the upcoming Union Budget for the fiscal year 2025–2026. Budget announcements have historically had a big effect on the stock market, affecting sectoral performance through the introduction of government-sponsored financial allocations and policy measures.Brokerage firm Emkay Global has examined short-, medium-, and long-term stock market performance after the budget across a number of indices. The study offers traders and investors insights by highlighting unique trends across several industries.
Performance in the Short Term (One Week Later)
Emkay claims that the majority of indices show a short-term bullish trend, with a higher proportion of positive closing falling between 55% and 91%.
With a positive closure rate of 91% and an overall return of 3%, the NSE Pharma index is the top performer. With an 8% favorable closing rate and a 2% return, NSE Media demonstrates strength as well.
Not all indexes, meanwhile, exhibit strong short-term performance. Emkay observes that the Nifty Oil & Gas and Nifty Realty indexes, which have positive closure rates of 45% and 55%, respectively, have less momentum. This implies that certain industries are still experiencing pressure even though the market as a whole is optimistic.
Performance in the Medium Term (Two Weeks Later)
After two weeks, Emkay's study shows a drop in the percentage of positive closing across the majority of indexes, indicating less bullish momentum. In particular, the PSUBANK index experiences a sharp decline in positive closes, going from 73% to 36%, while the overall return remains at zero percent.
The NSE Pharma index is still doing well, with a 73 percent positive closure rate and a 2 percent return in spite of the overall slowdown. The Nifty Realty and NSE Metal indices show mixed results, with lower positive close percentages and high average positive returns. These patterns show that some industries continue to thrive, whereas others are volatile.
Long-Term Results (After a Month)
Emkay's results demonstrate that during a one-month period, the majority of indices see additional drops in positive closures, with several displaying more negative than positive closes. Despite having the highest average positive return of 11%, NSE Metal only has a 45% positive closure rate, which indicates increased volatility.
With an overall return of -3 percent and a positive closing rate of just 27% and an average negative return of 11%, PSUBANK is still having trouble. The NSE IT index, on the other hand, is a notable exception, retaining a positive closure rate of 45% and an overall return of 2%, which is bolstered by a high average positive return of 7%.
Sector-Specific Patterns
The IT and pharmaceutical industries, according to Emkay, are resilient throughout all time periods and continuously post high positive closes and total returns. Particularly notable for its growth and consistency is the NSE Pharma index.
Banking and Financial Sectors: The Bank Nifty and Private Bank indexes perform moderately in the short term but deteriorate over time. With notable negative returns, PSUBANK in particular performs poorly over the medium and long terms.
The real estate and metals industries are very volatile, with significant fluctuations in average returns, both positive and negative. Emkay points out that Nifty Realty experiences a sharp drop in positive closes, which go from 55% after a week to 36% after a month.
The FMCG and consumer discretionary industries exhibit comparatively steady performance, but with lower total returns. They have a tendency to perform worse over an extended period of time.
Market Trends in General
Emkay lists the main market trends for several time periods:
near-Term Bullishness: The majority of indexes exhibit a high percentage of positive closing, indicating that the market typically performs well in the near term.
Medium-Term Neutrality: Performance varies over the course of two weeks, with fewer indices continuing to show significant upward momentum.
Long-Term Bearishness: Most indexes show more negative closing than positive ones after a month, suggesting a more general bearish tendency.
Consequences for Investors
Based on current market trends, Emkay recommends the following tactics:
Short-Term Traders: The IT, media, and pharmaceutical industries offer prospects for investors seeking quick profits due to their steady, profitable performance.
Long-Term Investors: Exercise caution because most indices have a one-month track record of underperforming. However, with careful examination, some industries, such as IT and pharmaceuticals, can still offer prospects.
Risk management: Although high-volatility industries like real estate and metals have the potential to yield large profits, they also involve a higher risk, especially when looking at longer time horizons.
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