Budget 2026 Expectations: Ashish Gupta, Chief Investment Officer (CIO) of Axis Asset Management Company, says that this time the market’s expectations regarding Budget 2026-27 are limited. He said that investors will keep an eye on the government’s fiscal discipline and policy stability more than any big announcement. Let us tell you that the budget will be presented in Parliament on Sunday, February 1 at 11 am.
“The good news is that market expectations are currently low,” Gupta said. He said that the government has already taken many important steps outside the budget. Such as reduction in GST rates, implementation of Labor Code, Production-Linked Incentive (PLI) and the recent trade deal. In such a situation, there seems to be limited scope for major new measures in the budget.
Concerns related to bond market
According to Gupta, after the selloff in the bond market in the last six months, investors will keep an eye on the government’s fiscal consolidation roadmap. “The market needs some confidence, especially on the bond supply and yields front,” he said.
He also stressed that a low fiscal deficit is helpful for the stock market as it keeps borrowing costs low and supports credit growth. “We need low-cost capital,” Gupta said.
Gupta said that bond yields have remained high since September, while in the meantime RBI has also cut rates. Despite this, financial conditions have become tight. According to him, weak credit growth will also be a negative sign for the stock market.
Emphasis on stability in tax policy
Regarding tax, Gupta believes that stability in tax policy is as important as any change in capital gains tax. He believes that reviewing the withholding tax can help in re-attracting debt investment in India, which has weakened due to capital outflows in the last one year.
Improvement in corporate earnings, still no return of FII
Gupta said that the corporate earnings outlook in India has improved. Midcap and smallcap companies are also seeing growth of more than 20%. Despite this, foreign investors have not been able to return. He said that strong growth in America and other global markets has kept capital away from India. Earnings recovery in the US is no longer limited to just big tech companies, but has spread to smallcaps, banking, manufacturing and consumption. This is the reason why foreign investors are not turning towards India.
Sectoral choice: Consumption and cement
Explaining his choice of sector, Gupta said that Axis AMC likes the consumption theme, which also includes the automobile sector. According to him, demand for two-wheelers, entry-level cars and commercial vehicles now seems to be improving. He also said that the demand for cement has increased in the last few months and consolidation is being seen in this sector. In Gupta’s words, “The cement sector is meeting all the required standards.”
Gupta further said that many of India’s economic indicators such as electricity demand, cement consumption and e-way bills have improved in recent months. However, he also said that the biggest challenge facing the market is still the withdrawal of foreign investors. Last year, about $19 billion went out of India and so far this month, about $3 billion has been withdrawn.
Also read- Huge rise of up to 13% in Gold ETF, leaving Silver ETF behind, now what should investors do next?
Disclaimer: The views and investment advice given by experts/brokerage firms on Moneycontrol are their own and not those of the website and its management. The website or management is not responsible for this. Moneycontrol advises users to consult certified experts before taking any investment decision.