Interrelation between the Institutional Investors and the Union Budget in the Indian Stock Market


  • Dr. Lovleen Gupta Associate Professor, Department of Commerce, Hindu College, University of Delhi
  • Dr. Kanwal Jeet Singh Associate Professor, Department of Commerce, Ramanujan College, University of Delhi
  • Srishti Jain Department of Commerce, Delhi School of Economics



Budget, Foreign Investors, Domestic Investors, Stock Returns, Volatility


The key purpose of this study is to gauge the effect of yearly union budgets spanning from 2010 to 2021 through observing yields and volatility in the Indian bourse. Overall, 12 union budgets are considered in the Indian scenario. Further, the present work strives to relate the market returns with the investment activities adopted by foreign institutional investors (FII) and domestic institutional investors (DII). The event, i.e., the proclamation of the budget happens on February 1 every year and therefore 60 trading days which are sub-divided into 30 days before the budget and 30 days subsequent to the budget has been analyzed in the study. Moreover, the event window of 60 days has been bifurcated into a period of pre-and post-3 days, pre-and post- 15 days, and pre-and post- 30 days around the budget. Paired samples T-statistic and F-test have been used in the current study. The results suggest that the medium-term returns are significantly influenced by union budgets. The volatility is greatest in the short-term period subsequent to the budget proclamation and it reduces with increasing time. One startling thing to observe is that falling returns and rising volatility in the short-term period post-budget are due to the selling activities of foreign investors. It is recommended to hold the stocks in the post-budget short-term period irrespective of the falling returns till the long-term to book profits.

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How to Cite

Dr. Lovleen Gupta, Dr. Kanwal Jeet Singh, & Srishti Jain. (2022). Interrelation between the Institutional Investors and the Union Budget in the Indian Stock Market. Ramanujan International Journal of Business and Research, 7(1), 10–20.