Comment on Budget Expectations: Market focussed on short-term capital gains tax
We believe that the upcoming budget will likely support the vision of “Viksit Bharat” by 2047, following a transformation similar to the one seen in the last decade. With the formation of the NDA 3.0 government, there are increasing expectations from the market for some allocation to address rural challenges and a potential cutback on capital expenditure.
The budget is expected to strike a balance between capital expenditure and addressing rural challenges. Moreover, a higher-than-expected RBI dividend has provided some flexibility to progress further with welfare schemes.
We anticipate that the government’s priority will continue to be achieving and maintaining macro stability by following a path of fiscal consolidation while balancing growth and stability. We expect the fiscal deficit for FY25 to be kept below 5.1%, with a goal of reaching 4.5% by FY26.
Currently, the market is closely monitoring developments related to the capital gains tax. Any deviation from market expectations could lead to some short-term unfavourable reaction, although the likelihood of this happening seems low.
– Naveen Kulkarni, Chief Investment Officer at Axis Securities
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