Budget 2024: D-Street investors' wishlist from Nirmala Sitharaman

The unexpected Fiscal Deficit target for FY25, set at 5.1% of the GDP, pleasantly surprised the market, which had anticipated a higher figure. Keeping such an aggressive target has several positive implications for the market.

The US-India Strategic and Partnership Forum (USISPF) also commend the government's continued focus on the trinity of infrastructure, inclusive growth, and fiscal prudence in line with growing US-India commercial ties.

In terms of priorities, the interim budget has continued its focus on raising capital expenditure - the type of expenditure which creates assets (think railways, roads, housing) - at a faster pace compared to revenue expenditure (which is essentially spent on salaries, interest payments, pensions, etc). This strategy has been adopted since the pandemic as the government introduced supply-side reforms to support growth by building economic infrastructure. Since FY21, capex has grown close to 30% on average per annum, compared to 11% growth in revenue expenditure.

The stable rating outlook reflects our expectation that India's sound economic fundamentals will be sufficient to offset the government's weak fiscal performance, helping to sustain elevated government funding needs and a high interest burden over the next 24 months, analysts wrote in a release.

Union Budget: Prime Minister Narendra Modi's BJP secured significant victories in key states, indicating possibilities of keeping the government away from lavish welfare schemes in the upcoming interim budget. Modi's vision for India's future may lead to a budget prioritizing fiscal prudence over excessive spending.

The Interim Budget 2024 provides guidance for formulating policies to foster and sustain growth, facilitate inclusive and sustainable development, improve productivity, and generate resources to power investments.

The impact of Union Budget on equities has reduced over the years, but it remains significant for Dalal Street. The Finance Minister, Nirmala Sitharaman, will present the Interim Budget for 2024-25 today. The market performance on Budget days has shown negative returns in the past, with the steepest fall in 2020. The recent state assembly elections and improved macroeconomic landscape have boosted investor confidence. Experts expect growth and investment-led announcements with a focus on infrastructure and support for the 'bottom of the pyramid'. The bulls on Dalal Street remain optimistic but await the finance minister's decisions.

Indian defence sector stocks excel globally, benefiting from geopolitical risk, domestic manufacturers' rise, and strong order books. The sector shows resilience amidst global market fluctuations and government's increased defense expenditure, positioning for sustainable growth. India's aerospace industry has many legs of growth and Hindustan Aeronautics is the key player in the space.

Union Budget: India gears up for the upcoming interim budget for fiscal year 2025, anticipated to be unveiled in a month. Finance Minister Nirmala Sitharaman has indicated no spectacular surprises. Speculations surround Sitharaman's strategies post recent state victories, suggesting a departure from populist measures. The 2019 interim budget provided tax benefits for lower-middle-income groups, support for farmers, a pension plan for informal sector workers, and incentives for real estate. As expectations rise, citizens await changes in policy that may shape India's financial landscape and influence their lives

Union Budget: EY India's Chief Policy Advisor said India's domestic factors for medium-term growth will be crucial amid global upheavals. With the interim budget for FY25 scheduled on February 1, 2024, the focus remains on evaluating FY24's revised estimates as groundwork for formulating FY25's budget, leveraging fiscal data from the Controller General of Accounts. The budget will be crucial to set forward capital expenditure plans amid other budget measures.