Budget 2024: Any reduction in capex or defence outlay can hamper market momentum, says Apurva Sheth of SAMCO Securities

livemint.com:

Apurva Sheth, Head of Market Perspectives and Research, SAMCO Securities, believes that any populist measure in the Budget which can increase the fiscal deficit will be seen in a negative light by the market participants. In an interview with MintGenie, he noted that any increase in taxes related to the capital markets like STT, Capital Gains, etc. can lead to a negative impact on the markets.

A reduction in capex or defence outlay could hamper the current momentum in the markets, added Sheth. Edited excerpts: The key themes of defence, railways, and infrastructure development are likely to remain in the limelight during the Budget. Allocation towards these pet themes of the Modi government is likely to remain higher in this interim Budget.

Last month FM Nirmala Sitharaman hinted that there won't be any big announcements in the Interim Budget. Since this will just be a vote on account the Budget that the government presents will just be able to meet the expenditure of the government till a new government comes into play. So don’t expect any major announcement from the Budget.

Even if there is a major announcement its shelf life is only till the new government comes into power and comes up with a full Budget in July 2024. Markets have generally given negative returns a week before the Budget is announced and positive returns a week after it’s announced. We have witnessed 16 Budgets (14 full and 2 interim) from 2010 to 2023.

The average Budget day returns in Nifty is 0.23%. Nifty's average returns one week before the Budget is -0.58% and one week after the Budget is 1.37%. Any populist measure that can increase the fiscal deficit will be seen in a negative light by the market participants.