The Indian stock market is abuzz with anticipation as the coalition government prepares to unveil its Budget 2024. This budget is not just a fiscal plan; it is a blueprint that will set the tone for the country’s economic trajectory. Investors, market analysts, and corporate leaders are keenly watching for signals that will guide their strategies and investment decisions. The expectations are high, with several key areas drawing significant attention.
Continuation of existing policies
One of the main expectations is the maintenance of current economic policies. The coalition government has received praise for its attempts to stabilise the economy by implementing a number of measures meant to increase growth, facilitate corporate transactions, and draw in foreign capital. Investors anticipate that these regulations will remain the same, guaranteeing a steady and predictable economic climate. Sustaining investor confidence and encouraging long-term investment in the stock market depends heavily on this stability.
Focus on infrastructure development
Infrastructure development, particularly road and highway development, is another critical area with high expectations. Many of the government’s ambitious measures to upgrade the country’s infrastructure network are now ongoing and have been well executed. Investors anticipate that the Budget 2024 will provide more funding to infrastructure development, causing an earnings boost in these companies. In addition to boosting economic growth, enhanced infrastructure boosts productivity, creates jobs, and attracts new investment.
Railway and defence sectors
The railway and defence industries are also being scrutinised. The country’s development and security depend heavily on the modernisation of defence capabilities and railroads. The stock market anticipates significant budgetary commitments to these industries, which may lead to positive developments for businesses operating in these sectors. Increased railroad investment can strengthen supply chains and logistics, which will increase economic efficiency even further.
No changes to capital gains tax
A significant concern for investors is the capital gains tax. The stock market hopes no tinkering with the current capital gains tax structure will occur. Any adverse changes could lead to market volatility and negatively impact investor sentiment. Maintaining the current tax regime would help sustain market stability and encourage long-term investments.
Divestment of public sector undertakings
PSU divestment is another topic of great interest. A key element of the government’s economic policy, the divestiture program aims to improve operational efficiencies and lower fiscal deficits. Investors anticipate budget 2024’s more aggressive and open divestiture plans. A successful divestment can increase corporate governance and release value.
GST optimisation
For the Indian economy, the Goods and Services Tax (GST) regime has been revolutionary. But there are requests for optimisation, especially with regard to lowering the GST rates on necessities like cars and appliances. Reducing the GST rates for certain items may increase consumer demand, enhance sales, and assist associated sectors. As to Business Today, this action may have a favourable effect on the stock market by enhancing the performance of automobile and consumer goods businesses.
Here are the expectations of specific sectors:
Real estate and construction
The real estate and construction industries are eagerly watching the budget for advantageous policies and incentives. Policies like tax breaks for home loans, subsidies for affordable housing, and streamlined regulations can give these industries a big boost. Increased demand for homes and growth in allied industries like steel and cement can result from increased support for real estate.
Technology and new ventures
The budgetary measures that promote the technology and startup environment are also sought after. Tech start-up growth can be accelerated by providing incentives for creativity, research and development, and easy access to capital. Policies that encourage digital transformation and provide an atmosphere that is favourable to technological improvements are expected by the stock market.
Statistical insights
The coalition government’s Budget 2024 holds immense significance for the Indian stock market. Investors and market participants are looking for a balanced approach that continues with existing economic policies, focuses on infrastructure development, modernises key sectors like railways and defence, and avoids unfavourable changes to the capital gains tax.
Moreover, aggressive divestment of PSUs and GST optimization can further enhance market sentiment. The budget’s handling of these expectations will significantly impact the stock market’s performance in the upcoming fiscal year. As we anticipate the budget release, we expect a forward-looking fiscal plan that promotes stability and sustainable economic growth.
Diwakar Rana, Fund Manager- PMS at Prudent Equity
