Impact of Union Budget on Stock Market

According to Article 112 of the Indian Constitution, the Union Budget of a year is a statement of the estimated receipts and expenditure of the government for that particular year. These estimates help economy and industry to know about approach of the government towards them, which is important to take various strategic decisions. Efficient market hypothesis suggest that stock market responds to the information available. Thus, Union Budget also makes the stock market volatile on the basis of expectation and estimates of budget. This research paper attempts to study the effect of announcement of union budget on stock market during the period of years 2011 to 2017. The data of return percentage of daily closing values of stock market indices viz. BSE 500, BSE SENSEX, BSE Auto, BSE Bankex, BSE IT and BSE Finance before and after announcement of budget are used for analysis. F-test and t-test applied are used to check the impact of Union Budget on Stock Market. Study reveals that there is significant impact of Union Budget on Stock Market