On February 1, 2025, mutual funds in India will observe a non-business day during the Union Budget presentation, meaning no transactions will be allowed. In contrast, Exchange-Traded Funds (ETFs) will remain operational, allowing investors to buy and sell units as the stock markets will be open for trading.
Mutual Funds
- Non-Business Day: The mutual funds will not allow any transactions on February 1, 2025, which is a significant day as the Union Budget is presented. This decision is upheld by asset management companies (AMCs) that have declared this day as a non-business day for all schemes.
- NAV Impact: While NAVs for mutual funds will still be declared on February 1, they are essentially academic since no units will be sold or redeemed on that day. Investors will need to wait until February 3 for their transactions to be processed at that day’s NAV.
Exchange-Traded Funds (ETFs)
- Business Operations: ETFs, however, will be fully operational on February 1. Investors can buy and sell ETF units directly on the stock exchanges, taking advantage of the trading day.
- NAV Declaration: NAVs for ETFs will also be calculated and published on February 1, aligning with their benchmark indices. This means that even though mutual funds are closed, ETF investors can still engage in market activities.
Trading Sessions
- Full Trading Days: Both the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) will operate full trading sessions on February 1, 2025. This decision is consistent with past practices during Union Budget presentations, where markets have remained open on similar days.
Important Details & Evidence
- A notice from the BSE confirmed that all mutual funds would observe a non-business day on February 1, 2025, which affects all schemes. This is a crucial aspect for investors to understand as they plan their transactions.
- Historical precedents, such as the Union Budget presentations of 2020 and 2015, demonstrate that the stock markets have consistently remained operational on Saturdays, providing context for current practices.
Final Takeaways
Investors should be aware that while mutual funds will not allow transactions on February 1, 2025, ETFs will provide opportunities for trading. This differentiation is essential for those looking to manage their portfolios actively during the Union Budget presentation. Understanding the implications of NAVs and the operational status of various investment vehicles will help investors make informed decisions as the date approaches.
