Post-budget commentary from Deepak Ramaraju, Senior Fund Manager, Shriram AMC.
Budget 2025-26 May spur Mutual Fund SIP inflows..!
Budget 2025 reaction comment From Deepak
Ramaraju, Senior Fund Manager, Shriram AMC
The union budget for FY 25-26 has focused
more on consumption lead economic growth form equity market expectations. The
cut in personal income tax may translate into higher discretionary spending and
hence sectors like Auto, Consumer Durables, Retail, Travel & Tourism and
selected FMCG companies may outperform the broader markets. Focus on improving
crop diversification, innovation, improve irrigation and favorable credit
schemes for farmers may be positive for farm equipment, tractors, fertilizer
etc.
Though the budget did not
add any negativity to the capital gains, the markets may remain buoyant for the
medium term. Cutting personal taxes may lead to higher savings, which might
result in increased SIP flows, potentially supporting the markets further.
Capital market-related sectors such as AMCs, and brokerage houses may expect
higher retail participation.
Overall, the fiscal deficit is pegged at 4.4%
of GDP ensuring the fiscal prudence of the government. The finance minister has
tried to do a balancing act. The demand side of the economy is supported
especially the agriculture, manufacturing and SMEs are provided with supportive
measures, not much tweaks to custom duties and boost to exports. This should
support employment and consumption which has taken a back seat in the last 2 quarters.
The rural demand may marginally improve further. The capex spending is kept at
11.2 Lakh crores, indicating the intention of the government to continue to
spend.
Sectors such as Defense and Railways may stay
muted on cutting down of expenditure as well as Oil and Gas and PSU on lack of
any positive announcement.
Disclaimer:
The Fund may or may not have any present or future positions in these
sectors / securities / commodities. The Fund/ AMC does not indicate, or
guarantee returns on any investments. Readers should seek professional advice
before taking any investment-related decisions.
Views expressed herein cannot be construed to be a decision to invest.
The statements contained herein are based on current views and involve known
and unknown risks and uncertainties. Any reliance on the accuracy or use of
such information shall be done only after consultation with the financial
consultant to understand the specific legal, tax or financial implications.
Mutual Fund investments are subject to market risks, read all
scheme-related documents carefully.
