Investors Pull Out Rs 17,220 Cr After 1st Feb Despite Best Budget Reaction by Markets in 22 Years

After registering record highs post Union Budget in February, Indian investors withdrew Rs 17,220 crore from the stock market and company debt mutual funds in February. The report further states that corporate bonds saw the highest outflows in about two years.

However, on 1 February 2020 , as Finance Minister Nirmala Sitharaman announced a Budget that is being seen as growth-oriented and balanced, Dalal Street gave a big thumbs up, a report in Bloomberg said.

The Sensex rallied 2,300 points, or 5 percent, to 48,600.61 and Nifty gained 646.60 points, or 4.74 percent, at 14,281.20 on that day’s session. This has been the best performance by the stock market on a Budget Day since 1999.

Merely six days later, equity benchmarks snapped their Budget rally as investors booked profits at record highs. The benchmarks staged a gap up opening wherein the Sensex rose as much as 487 points to hit record high of 51,835.86 and Nifty 50 index touched an all-time high of 15,257. However, late profit booking in recent outperforming auto, metal, PSU banking and pharma shares led to Sensex declining as much as 642 points from record high and Nifty briefly falling below 14,100.

On the day of the Union Budget presentation, in the last 10 years, the Indian equity markets’ response remained mixed. The observations very much reflected in the benchmark indices’ performance. The BSE Sensex has fallen by 0.16 to 2.43 percent six times and has risen by 0.48 to 1.76 percent in the remaining four days of presentation of Union Budget in the last 10 years.

According to a report by Reuters, India’s retail investors are ditching mutual funds to put money directly into stock markets, lured by soaring share prices and lacklustre returns at mutual funds in recent years.

Domestic investors have withdrawn Rs 275 billion from equity mutual funds in the year upto 16 February, according data from the Securities and Exchange Board of India (SEBI), after dumping a total of Rs 545 billion in 2020.

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