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Market Rally to stay on Budget Optimism

BusinessMarket Rally to stay on Budget Optimism

NEW DELHI: There couldn’t be a more robust underlining of India’s strong macro fundamentals — ahead of a widely anticipated progressive Budget — than JP Morgan’s inclusion of Indian bonds in its emerging market index, commencing on 28 June, 2024, which is expected to attract over USD 20 billion in inflows over 10 months through 31 March, 2025. On June 18, the Sensex surpassed the 77,150 mark and the Nifty crossed 23,500 for the first time as a projected focus on rural sectors, small housing finance companies, clean energy, fertilizers, and infrastructure – sent out signals of a sustained rally in the domestic market on the hope of a popular Union Budget and a focus on the Make in India plan to encourage domestic players.

“Optimism surrounding a favourable Union Budget, FIIs inflows, stable inflation, a falling current account deficit, impressive Manufacturing PMI data and the anticipated inflows from the inclusion of Indian government bonds in the JP Morgan EM Bond Index on 28 June have further fuelled market sentiment,” agrees Vikas Jain, Senior Research Analyst at Reliance Securities who expects the domestic equity bourses’ northbound journey to continue, backed by rallies across global markets. “Strong advance tax collections and growing perception that the government will focus on rural growth in the upcoming Budget will positively impact market sentiment,” says Jain.

Radhika Rao, Executive Director and Senior Economist, DBS Bank also believes markets are likely to focus on disbursements towards the core schemes in the upcoming Budget, which includes programmes covering public health infrastructure, rural housing, farming community and push towards sanitation as well as cleanliness. “Allocations towards a few of these programmes had been trimmed in the revised FY24 outlay but increased in the FY25 interim presentation,” notes Rao, who underlines the importance of maintaining this support or increase at the margin as a signal of the intent to provide more broad-based support to the populace, alongside the continuation of supply-side reforms including infra spends.

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