Union Budget 2025: Sensex surge reflects budget optimism, but economic struggles loom large

On February 1, 2025, it was reported that the Sensex had rallied by over 200 points, crossing the 77,700 mark, reflecting a renewed sense of optimism ahead of the upcoming Union Budget 2025 . This upward movement had contributed about 2,100 points to the index over the last four sessions, marking a notable recovery.

However, it was also noted that the Sensex was still down by around 2,900 points, or 3.6%, from the last Budget on July 23, 2024.

Satish Chandra Aluri from Lemonn, a tech-driven broking firm, told Times of India that the rally was broad-based across sectors, driven by Budget optimism, which had been evident in recent sessions.

The Economic Survey, presented on January 31, 2025, had further bolstered sentiment with growth projections for FY26 ranging from 6.3 per cent to 6.8 per cent, aligning with investor expectations. He also highlighted that the government’s commitment to increasing capital expenditure had contributed to the positive outlook for the Budget.

Despite the rally, market participants were aware of broader challenges. Investors had experienced losses of approximately Rs 26.3 lakh crore in market capitalisation since the last Budget, with the BSE’s market cap standing at Rs 433 lakh crore. Smaller stocks, particularly in the midcap and smallcap sectors, had faced steeper declines, with the BSE’s midcap index falling by 7.3 per cent and smallcap index dropping by 5.4 per cent since July 2024.

Sheetal Malpani from Tamohara Investment Managers pointed out to Times of India that the Budget 2025 held far greater significance compared to recent Budgets, as it was being presented at a time when the Indian economy showed signs of weakness. She stated that balancing growth stimulation with fiscal discipline would be a tough challenge, especially considering global uncertainties.

As of February 1, 2025, the Sensex had closed at 77,680.17, up by 179.60 points (0.23%), indicating a cautious recovery. The market remained volatile, influenced by global economic pressures such as inflation, oil price fluctuations, and geopolitical concerns. With the Union Budget 2025 approaching, investors were eagerly awaiting the Finance Minister’s approach to managing these complexities.