Budget 2019: Will markets sing Modi’s tune? Takeaways for stock market, retail, institutional investors

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Budget 2019: Even as the Narendra Modi-government announced various tax relief for farmers and middle-class in Budget 2019, ahead of the Lok Sabha polls, stock market experts point out that budget has struck a fair balance between populist measures, and fiscal discipline. “Government has  eschewed populist  impulses in an election year & has admirably arrested the slippage in fiscal deficit to just 3.4% of GDP for FY19. The Budget provides a massive boost to the primary engine of growth i.e. domestic consumption through income tax sops for nearly 30 million low-income taxpayers and 120 million marginal farmers,” Ajay Bodke, CEO Prabhudas Lilladher PMS said in  note.

According to Alok Singh of BOI-AXA Investment Managers, there is a clear balance between boosting the economy by consumption and supporting that consumption while at the same time trying to be as fiscally prudent as one can be in the present environment. “One needs to look at the implications of this on the broader markets; I think all consumer focused segments will be boosted. We are also seeing a trend in the corporate lenders where balance sheets are getting repaired, we saw a couple of banks moving out of PCA yesterday. I think that all this will give a lot of impetus to the market,” Alok Singh of BOI-AXA Investment Managers told in a note to Financial Express Online. The upcoming monetary policy meeting should be guiding force for the fixed income market, Singh added. “We believe that the RBI may go on the accommodative side, which will further fuel consumption,” he said.

Sharing his view on the impact of Budget on stock market, technical analyst Milan Vaishnav noted that severe volatile moves were witnessed in the markets just like any other Budget day, he believes that the moves in the markets will be broadly guided by technical parameters. “Despite euphoric move after the speech, NIFTY did not move past the critical resistance area of 10950,”Milan Vaishnav, CMT, MSTA, Consulting Technical Analyst, Gemstone Equity Research & Advisory Services told Financial Express Online. Once the overall Budget is digested the markets, it is set to react positively to it, he said.  “We will eventually see the NIFTY moving past the 10950 mark and testing 11200-11300 zones by elections,” he noted.