The BSE signage is seen through foliage in Mumbai, India. (Photographer: Vivek Prakash/Bloomberg)

Budget 2019: What Dalal Street Made Of Modi’s Election Budget

India’s benchmark index posted its best weekly rally of 2019 after the government proposed fresh schemes in the budget ahead of the general election.

The NSE Nifty 50 Index advanced nearly 1.1 percent in the last five days. The 50-stock gauge ended 0.58 percent higher on the budget day after a topsy-turvy trade.

This comes after Finance Minister Piyush Goyal announced a slew of measures, including an income support scheme for farmers and a pension plan for workers in the unorganised sector. He also announced rebate for small taxpayers. It also revised the fiscal deficit target for financial year 2018-19 from 3.3 percent to 3.4 percent and maintained it for FY20.

Also read: Budget 2019: Is Modi’s Election Budget Powered By Ambitious Tax Targets?

Here’s what market experts had to say post the budget speech:

Shift Focus Towards Election

The markets will, sooner or later, start discounting elections, according to Nilesh Shah, managing director of Kotak Mahindra Asset Management Co. Ltd.

“In the run-up to elections, the market will be worried how the political scenario and economic policies will shape up. In all, it will be a volatile time for the markets.”
Nilesh Shah, Managing Director, Kotak Mahindra Asset Management Co. Ltd.

Also read: Budget 2019: Government Proposes Gross Borrowing Of Rs 7.60 Lakh Crore In FY20

‘No Negative Is A Positive’

The tax breaks for India’s middle class and sops for small and marginal farmers maintains a status quo on the fiscal front, according to Chakri Lokpriya, managing director and chief investment officer at TCG Advisory Services.

“From that perspective no negative is a positive in the current budget,” Lokpriya told BloombergQuint in an interaction.

Also read: The Winners and Losers From India’s Latest Budget Plan

Room For Rate Cut?

Finance Minister Piyush Goyal has set the ground for the country’s central bank to cut interest rates, said Saurabh Mukherjea of Marcellus Investment.

“This was the smartest pre-election budget. There could be a capex pull back post-election,” Mukherjea told BloombergQuint in an interaction.

Also read: Budget 2019: Railways Gets Highest Ever Allocation Of Rs 1.58 Lakh Crore

A Balanced Budget?

The budget 2019 was a balanced one for markets, said Jinesh Gopani, head of equities at Axis Mutual Fund.

Not much negative on the fiscal deficit front, particularly good for the consumption story
Jinesh Gopani, Head of Equities at Axis Mutual Fund

Also read: Budget 2019: Modi Turns To RBI For Fixing Fiscal Math After Populist Budget

Matured And Responsible…

The government showed “maturity and a sense of responsibility” by not going overboard, while also addressing the pressing concerns of the vulnerable sections of voters, said UR Bhat, managing director of Dalton Capital Advisors. “This strongly suggests that the NDA expects to be re-elected in the forthcoming federal elections.”

The marginal slip in the fiscal deficit for FY 2018-19 is par for the course, given that the rural direct benefit transfer scheme starts from Dec 2018 itself. The estimates for FY20 are also not very aggressive with an assumption of a 11.5 percent nominal GDP growth and tax buoyancy of about 1.25.
UR Bhat, Managing Director At Dalton Capital Advisors

Also read: Budget 2019: Global Rating Firms On Fiscal Deficit, In Line Or Off Target?

Less Populist

This budget is a lot less populist than expected, according to Ananth Narayan, professor at SP Jain Institute of Management and Research.

Also read: Income Tax Slabs Budget 2019: BQ Explains The Big Changes For Income Tax Payers 

Catch all the budget updates here.

‘Real Estate Sector Will Benefit’

The affordable housing came in the previous budget. In this budget, however, a couple proposals of is very positive, especially for the real estate segment in Mumbai and Pune, Envision capital’s Nilesh Shah told BloombergQuint in an interaction.

The two-wheelers and consumer appliances segments will also benefit from the budget proposals, he said.