The recently unveiled budget has set the stage for stock-specific growth amidst prevailing market volatility. Investment strategies will need to pivot to align with new fiscal policies and economic incentives brought forward by the government. One of the key highlights of this budget is the unexpected tax relief.
“I do not think anyone in the market was expecting the slabs to go to Rs 12 lakh, so it has come as a really good positive surprise,” said Madhusudan Kela, a prominent market analyst. He added that this significant relief will likely boost consumer sentiment across various sectors. The budget’s focus on capital expenditure (capex) is seen as another positive move that could lead to a variety of spending and investment activities.
“The biggest squeeze in India over the last two years was experienced by the middle class due to inflation outpacing wage growth. This tax relief is really significant,” Kela noted. The budget assumes a nominal double-digit economic growth and a 14-15% surge in tax collections, which Kela finds optimistic given the global economic backdrop.
Stock-specific strategies amidst volatility
There seems to be a shift towards consumer-driven growth. “The element which stands out is the one lakh crore of tax cuts, acting as a freebie of sorts, which is expected to have a multiplier effect on the economy,” Kela said.
He suggested that the sectors likely to benefit from this influx of liquidity include FMCG, white goods, and hospitality, as consumers look to increase their spending. This focus on ‘Consume India’ could lead to stock-specific growth, as companies in these sectors are expected to see higher demand. The sentiment is optimistic, with an expectation that the increased consumer spending will drive economic growth and offer returns to investors selective in their stock picks.
The overall market reaction to the budget has been mixed, reflecting the challenges and opportunities that lie ahead. With significant tax incentives and a strong push for capex, the general consensus is one of cautious optimism. As the market digests the various budget provisions and their potential impacts, stock-specific strategies could provide the best returns amidst the prevailing volatility.
The direction set by the government indicates potential growth in consumer-driven sectors, creating new opportunities for discerning investors.
