The upcoming Budget could be the most important one for the stock market after the early 1990s, when India launched economic liberalisation, according to Morgan Stanley India Strategist, Ridham Desai.
“While history suggests that the Union Budget’s influence on short-term market performance is declining, expectations (measured by pre-Budget performance) are still important in deciding what the market does after the Budget.”
However, MS in a research report said the upcoming Budget in itself is unlikely to be a game-changer. “Our past experience in tracking the Union budgets shows that it can at best be viewed as a platform for the government to set the broad objectives of its economic policy, and most of the details of the policy action actually take place outside of the Budget,” the report said.
The report said that the key factor to track in the Budget is the government’s commitment to fiscal consolidation. “We believe that the government will maintain the fiscal deficit reduction road map according to the medium-term fiscal policy and target to reduce the fiscal deficit to 3.6 per cent of gross domestic product in F2016 (2015-16) from an expected 4.1 per cent of GDP in F2015 (2014-15),” the report said.
“Our analyst team expects positive for cement, financials, hotels, Internet and e-commerce, media, metals & mining, oil & gas, real estate, telecom and utilities,” MS report added.