Can the Union Budget be the game-changer that investors have been waiting for? As the Indian equity market battles a short-term bearish trend, all eyes are on the upcoming budget for signs of revival. Let’s see how bold reforms could improve market sentiment and bring back long-term growth.
Why is the Market Bearish?
Since September 2024, the Indian equity market has faced a short-term bearish trend driven by multiple factors, with the economic slowdown being a major contributor. Breaking out of this phase and resuming a long-term bull run will require a strong catalyst. The Union Budget brings hope and could play a key role in boosting investor confidence.
Can Tax Reforms Boost Consumption?
To reverse the bearish trend, stimulating domestic consumption—a key pillar of economic growth—is crucial. While rural demand has shown signs of recovery, urban demand still needs a push. Increasing disposable income through tax exemptions or job creation could provide a significant boost. There’s talk that the government might raise the tax exemption limit to ₹10 lakh, which could encourage more spending and drive consumption.
Capex Revival: A Key to Economic Growth
Government capital expenditure (capex) has been a major growth driver but slowed recently due to the election cycle, impacting fiscal expenditure targets. A renewed focus on sectors like railways and defense could provide the necessary momentum.
The Production Linked Incentive (PLI) scheme has boosted growth in specific industries, but stronger efforts are needed to encourage private investment. Since consumption, private investment, and government expenditure are the three pillars of GDP growth, all must receive attention in the upcoming budget for a robust recovery.
Sectors Likely to Benefit from the Budget
- Healthcare: With concerns about a resurgence of viral infections, the healthcare sector may see increased budgetary allocations to strengthen medical infrastructure.
- Real Estate: Increasing tax exemption limits on home loan interest could enhance affordability and boost demand in the housing sector.
- Green Energy: Continuing incentives for renewable energy projects is expected, aligning with India’s sustainability goals.
- Life Insurance: Relief through reduced GST on premiums could offset the impact of the new tax regime, helping the sector regain momentum.
Conclusion
The upcoming Union Budget holds the key to putting India’s growth trajectory back on track. By addressing consumption, accelerating capex, and supporting sectors like healthcare, real estate, and green energy, the government can lay the foundation for a broad-based recovery. Will these measures be bold enough to break the bearish trend and reignite the long-term bull run? Investors should stay tuned—this budget could set the stage for a brighter, more prosperous market future.
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