Post the budget session, the benchmark indices tanked 5%, as the markets did not like the revised estimate of the fiscal deficit from 6.2% in the interim budget to 6.8% in the current budget. Further, adding to the woes of the market was the stance of the finance minister on the disinvestment agenda as allocated receipts from the same were pegged at a meagre Rs. 1120 crore. This is one of the lowest proceeds in the last five years. However, at the same time, the government has done reasonably well to meet the expectations of the infrastructure sector, the social sector and the common man to keep the engine of inclusive growth rolling.
We believe that by keeping mum on various important issues the finance minister has kept us all guessing as to how the government will achieve the 9% GDP growth in the long run and simultaneously manage public finances. However, we believe the market will not digest this silence well in the near term. Still, the government will initiate gradual and disciplined policy actions to return to a higher growth trajectory.
The shedding of expectations built into the stock prices was the main reason for the market to correct. We believe the decline in the markets would provide investors an opportunity to buy for the medium to long term and cash in on the opportunity that they had missed during the election rally.
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