Union Budget 2024: Anticipating stock market reactions pre and post budget
According to Morgan Stanley, investors in the Indian stock market ought to concentrate on three aspects of the Union Budget.
PTC News Desk: This year's Union Budget 2024 is scheduled to be unveiled on July 23. On February 1, Finance Minister Nirmala Sitharaman highlighted "Viksit Bharat by 2047," a comprehensive plan for which is anticipated to be presented in the whole budget.
Morgan Stanley, a brokerage business, predicts that the finance minister will stick to the government's 5.1 per cent GDP target for fiscal deficit in 2025 and that the goal of 4.5 per cent GDP by 2026 would be reached.
The brokerage business claims that in the thirty days after the budget, the stock market drops on two out of three instances. The analysis revealed that if the market has increased in the 30 days leading up to the budget, the probability of a decline increases to 80 per cent. In thirty years, the Indian stock market has only experienced gains before and after the budget twice.
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1. Fiscal consolidation: Morgan Stanley indicated that a reduction in the fiscal deficit below 5% may not be well received by the stock market, and that any departure from the target fiscal deficit can have an impact on the market.
2. Infrastructure: The stock market may be impacted by increased spending on social and physical infrastructure. Consumer discretionary and industrial stocks will probably do better if the government increases its investment on infrastructure and rural areas. The brokerage stated that it is still overweight in all three sectors.
3. Investment by sector: The absence of significant tax cuts or expenditure on redistribution may surprise the stock market, therefore sector-specific incentives and spending will be essential. Morgan Stanley continues to be overweight in the financial, consumer discretionary, industrial, and technology sectors.