Budget Reactions by Financial Companies

1) Yuvraj A. Thakker, Managing Director, StoxBox

Union Budget 2024-25 marks a transformative phase for the stock market, with a strong focus on infrastructure and defense spending. The increased allocation for infrastructure projects is expected to stimulate economic growth, enhance connectivity, and drive significant investments in related sectors. Similarly, the heightened defense budget reflects a commitment to national security while opening avenues for defense-related industries. These strategic investments are poised to boost market confidence, attract capital inflows, and generate new opportunities across various sectors. Overall, the budget’s emphasis on infrastructure and defence is set to create a favourable environment for sustained market growth and investment.”

2) Manish Chowdhury, Head of Research, StoxBox

– The key highlight of the budget is the fine balance between fiscal prudence and welfare schemes, with a special focus on Bihar and Andhra Pradesh. With most pointers in line with the interim budget, the key takeaway is the downward revision to the FY25 fiscal deficit figure to 4.9% and an increase in capital gains tax. Though there is a tinge of populist measures on expected lines, the government remains focused on job creation, infrastructure development, strengthening the ecosystem for manufacturing, renewable energy, and new sectors, and creating disposable income in the hands of people with a key focus on rural. Though we do not rule out some kneejerk reaction in equity markets, the long-term trajectory and the intention of the government looks pro-economy and adding wings to move the economy towards the USD 5 trillion mark in the near term.

3) Bhavik Thakkar, CEO, Abans Investment Managers Pvt Ltd

– The budget’s primary focus seems to be on employment and job creation which reflects in (a) Employment Linked Incentives which will benefit 82 lac people across 3 initiatives (b) Skilling-related financial support for Skilling Loan of upto ₹7.5 lacs and subvention of 3% interest for education loans (c) Top 500 companies can provide 1-year internships where the government will support almost 90% of compensation and even 10% can be funded through companies’ CSR obligation… this means additional man power resources will be available without significant cost burden.

Infrastructure:

– Before the budget, there was high expectations that the government will increase infrastructure allocation from the interim budget announced amount of ₹11.1 lac cr to higher value given the exceptional dividend received from RBI and robust tax collection but against that government has kept the allocation same which is 11% growth over FY24 allocation and in line with nominal GDP growth rate. One of the reason could be extra allocation to infrastructure may result into continued higher-than-expected inflation which will reduce RBI’s ability to reduce interest rates. The announcement in today’s budget is more focused on DBT (Direct Benefit Transfer) to beneficiaries rather than spending to increase the velocity of demand.

4) Dr. Mayank Joshipura, Ph.D.|Vice Dean, Research & Ph.D., Professor-Finance|School of Business Management, NMIMS, Mumbai

– The Modi 3.0 government’s first budget headline is the target fiscal deficit of 4.9% for 2024-25, which shows unwavering commitment toward budgetary deficit. The increase in STCG and LTCG tax and STT on F&O is a dampener for the stock markets and might spook the market, but an increase in the exemption limit from the current Rs. 1L to Rs. 1.25L will help retail investors and encourage long-term investing. Increasing the standard deduction and revising new personal taxation rates is a significant relief for individuals. Overall, the budget is balanced, focusing on critical areas such as MSME, employment, affordable housing, skill building, ease of doing business, and energy transition without losing focus on infrastructure development and fiscal discipline. The compulsions of coalition politics are visible regarding announcements focused on specific states. The digitalization of land records is a significant step forward in the direction of land records.

5) Vaibhav Shah, Fund Manager, Torus Oro PMS

– Post Economic Survey released yesterday with a specific mention of the rise in speculation and capital market activity, there was nervousness among players that capital gains may be rejigged. The latest annoucement with respect to the increase of capital gains rate is negative as it has caught everyone by surprise. Also from a stable regime now we are witnessing changes to the regime which raises further doubts on the continuity of the rate regime