Economic Survey Lifts Indian Equities for Third Straight Session: What the Three-Day Rally Signals for Budget Week

• admin
• April 2, 2026
• Uncategorized
• 0 Comments

Indian benchmark indices extended their winning streak to three consecutive sessions on January 29, with the Sensex gaining 198 points and the Nifty reclaiming the psychologically important 25,400 level, buoyed by optimism surrounding the Economic Survey tabled in Parliament. The pre-Budget rally reflects market expectations of growth-supportive fiscal measures despite persistent concerns over valuations and foreign institutional outflows.

New Delhi, January 2025 — The Economic Survey 2024-25, released ahead of the Union Budget, injected fresh momentum into Indian equities, with the Sensex closing at approximately 76,750 and the Nifty settling above 25,400. This three-day advance marks the longest winning streak for Indian markets in January 2025, a month otherwise characterised by heightened volatility driven by global risk-off sentiment and sustained FII selling.

What Is Driving the Three-Day Rally?

The Economic Survey’s projections of 6.3-6.8 percent GDP growth for FY26 provided the immediate catalyst for the rally, reassuring investors that India’s macroeconomic fundamentals remain resilient. Sectoral rotation favoured banking and infrastructure stocks, which typically outperform during pre-Budget positioning as markets anticipate capex-heavy fiscal announcements. Domestic institutional investors continued their buying spree, partially offsetting approximately ₹78,000 crore in FII outflows witnessed since October 2024. Technical analysts note that the Nifty’s reclamation of 25,400 establishes a near-term support base after the index briefly breached 25,000 earlier this month.

What Does This Mean for India’s Market Trajectory?

The timing of this rally is significant — Indian markets have historically exhibited positive momentum in the five trading sessions preceding Union Budget announcements. Since 2019, the Nifty has averaged a 1.2 percent gain during this window. However, post-Budget performance remains highly contingent on whether fiscal deficit targets and capital expenditure allocations meet elevated expectations. The current rally may prove fragile if the Budget disappoints on infrastructure spending or introduces unexpected tax measures affecting equity markets.

How Does This Compare to Previous Pre-Budget Rallies?

The current three-day gain of approximately 700 Nifty points mirrors the pre-Budget momentum observed in January 2024, when optimism over interim Budget continuity drove similar advances. Unlike 2024, however, the present rally occurs against a backdrop of weakening rupee performance and elevated crude oil prices, factors that constrain the government’s fiscal manoeuvre room. The Nifty’s January 2025 performance remains negative month-to-date despite this week’s gains, contrasting with January 2024’s 2.4 percent monthly advance.

• Sensex closed at approximately 76,750, up 198 points on January 29, 2025
• Nifty reclaimed 25,400, marking a three-session winning streak
• Economic Survey projects FY26 GDP growth at 6.3-6.8 percent
• FII outflows since October 2024 exceed ₹78,000 crore
• Union Budget 2025-26 scheduled for presentation on February 1

What Should Investors Watch?

Market participants should focus on three Budget-related variables: the fiscal deficit target for FY26 (consensus expects 4.5 percent of GDP), capital expenditure allocation growth, and any modifications to long-term capital gains taxation. Post-Budget volatility typically peaks within two trading sessions of the announcement, making position sizing critical for short-term traders. The RBI’s monetary policy decision on February 7 will provide the next major directional cue, with markets pricing in a potential 25 basis point rate cut.

Analyst’s View

The pre-Budget rally reflects tactical positioning rather than fundamental conviction, given persistent headwinds from FII outflows and global uncertainty. Investors should treat the 25,400 Nifty level as a pivotal threshold — sustained trading above this mark post-Budget would confirm bullish momentum, while a breakdown could trigger renewed selling toward January lows near 24,800. The Economic Survey’s growth optimism requires validation through actual Budget allocations; markets will punish any fiscal conservatism that constrains infrastructure spending. Watch for sectoral divergence post-Budget, with defence, railways, and renewable energy likely to outperform if capex themes dominate.