‘Budget lacking a populist streak could disappoint investors’
Edited excerpts: The June quarter (Q1 FY25) earnings are expected to be a mixed bag. Based on operational updates, it is evident that banks will likely witness a weak quarter due to soft loan and deposit growth attributed to seasonality. Net interest margins (NIMs) are also expected to contract.
We anticipate strong performances from sectors such as auto, capital goods, pharma, and cement. In autos, the trend towards premiumization is expected to expand margins, while increased sales in the US are likely to bolster pharma companies' results. For capital goods, a key area to monitor will be whether order inflows in Q1 were impacted by the general elections in India.
Key areas to watch include the trend in volume growth for consumer companies, the trajectory of order books for defence and railway companies, and management commentary from IT firms. The Modi 3.0 Budget must strike a balance between populism and vigilant management of India’s fiscal deficit. Simultaneously, it needs to pave the way for advancing the agenda of Atmanirbhar Bharat and executing a robust capital expenditure of ₹11 trillion as announced in the Interim Budget.
Over the next 6-8 months, assembly elections are scheduled in Maharashtra, Jharkhand, Jammu & Kashmir, and Haryana. Therefore, the Budget is expected to prioritize farmers, the rural and urban poor, and the middle class. I think there will be an increase in outlay for rural development and special focus on employment-related sectors.
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