Budget 2024: What should be your investment strategy now? 4 of top market experts share their advice

Budget 2024: The Indian market concluded in the negative territory on Thursday, February 1, following the presentation of the interim budget. The market indices closed lower, registering a movement of less than one percent for the second consecutive budget day session.

The day’s volatility reflected the market’s response to the budget announcements, with investors assessing the implications and adjusting their positions accordingly. The consecutive modest movements suggest a cautious market sentiment as participants digest the fiscal measures outlined in the budget.

Prior to the budget announcement, the BSE Sensex experienced a notable surge, rising by 399 points to reach its day’s high at 72,151.02, while the Nifty similarly advanced by 107 points, reaching 21,832.95. However, both benchmark indices witnessed a decline of almost one percent each from their intra-day highs following the budget disclosure, ultimately reaching their respective intra-day lows. The Sensex concluded the day 106.81 points or 0.15 percent lower at 71,645.30, while the Nifty settled 28.25 points or 0.13 percent lower, closing at 21,697.45.

The sixth budget presented by the current Finance Minister and the last of the Modi-led government’s second term highlighted fiscal consolidation, infrastructure, agriculture, green growth, and railways. No changes were made in tax rates, disappointing salaried individuals. The Fiscal Deficit target for FY25 stood at 5.1 percent of the GDP, surpassing expectations, with the FY24 target revised down to 5.8 percent. The FY25 capex target was raised by 11.1 percent to ₹11.1 lakh crore, signaling a focus on robust capital expenditure. The complete budget is scheduled for July after the formation of the new government post the Lok Sabha Elections.

“The domestic market was marginally disappointed by lower than expected infra spending in the interim budget. However, the government’s commitment to fiscal prudence, targeting a fiscal deficit of 5.1 percent for FY25BE, is expected to improve the outlook on economic ratings. This led to a significant drop in India’s 10-year yield by 100bps to 7.04 percent, reflecting optimism due to lower-than-expected government borrowing. Meanwhile, the US FED’s decision to maintain rates without clear guidance on future cuts dampened market sentiments,” said Vinod Nair, Head of Research at Geojit Financial Services.

With the conclusion of the budget, market attention is set to revert to earnings and the impending RBI policy next week. How is the market going to perform going ahead? What should be your market strategy now? Here’s what experts say:

Sonam Srivastava, Founder and Fund Manager at Wright Research, PMS

In the wake of Budget 2024, investors are advised to adopt a strategic, long-term approach, focusing on sectors poised for growth due to the government’s latest policy initiatives. As the market digests the budget’s implications, investors should prioritise diversification, aligning their portfolios with sectors that stand to gain from the government’s focus on sustainable development and digital transformation. Staying informed and adaptable will be key to navigating the post-budget market landscape effectively.

Ajit Mishra, SVP – Technical Research, Religare Broking Ltd

Markets oscillated in a narrow range on the budget day and settled marginally lower. The tone was positive at the beginning however profit-taking emerged around the previous swing high. Consequently, Nifty surrendered all its gains and finally settled closer to the day’s low at 21,697.45 level. Meanwhile, a mixed trend on the sectoral front kept the participants occupied wherein energy, auto, and banking posted decent gains while metal and realty traded under pressure.

Markets are not in a hurry for the next directional move and the recent price action reaffirms our view. Traders have no option but to align their positions accordingly and focus more on a stock-specific trading approach. Though we are seeing consistent outperformance from the broader indices despite the overbought condition, we feel it is prudent to restrict exposure and prefer only quality names.

Nifty traded in a narrow range post major event and closed with a loss of 28 points at 26,697 levels. Sector-wise it was a mixed bag. Major buying was seen in government companies especially PSU Bank (index) which was up 3 percent post FM speech. On the global front, the US Fed concluded by maintaining its status quo and did not hint at an early rate cut which dampened global sentiments. In the Interim Budget, the government emphasised on empowering 4 pillars of Viksit Bharat namely Youth, Poor, Women, and Farmers. Further, the government continues to focus on consolidating the fiscal deficit and investing in infrastructure. Some of the sectors to benefit are affordable housing & finance, infra, railway, defence, and consumption. With two major events now behind, we expect markets to take support from the ongoing earning season and should remain in positive territory.

Raj Vyas, VP of Research, Teji Mandi

This is a good budget and there is something for everyone. Well, it’s a huge positive in terms of fiscal rectitude, not only is the next fiscal deficit reduced to 5.1 percent but the current year estimate is also cut down to 5.8 percent vs 5.9 percent earlier and the market was not expecting anything like this to come. They have also reduced their borrowings which will impact the banking stocks positively as banks have a lot of bonds and we may see EPS of banks rising by 31st March, 2024.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decision.