After continuous rally in Nifty 50, it declined by 1.09% on Friday's trading session. In our previous blog article, I have mentioned that we can expect a mild correction on account of profit booking in the market.
There were various factors which led this. Let us explore them and we can look at which sectors can gain investors' attention ahead of the budget week. Finally the article states about some common expectations for this budget.
Reasons for the market correction:
Firstly, as I said earlier, the Nifty was at an overbought region last week. So, whenever the markets value high there can be some sought of correction in the market.
However the main reason was, profit booking ahead of budget expectations. Even this we mentioned in our previous article. Since we donot know which sectors will be highly benifited in the budget, investors usually book their profits before budget and invest accordingly.
The third reason was weak global cues and the election uncertainty in US. Even the software outage also contributed to slipping in foreign indices.
Sectors that is expected to gain investors' focus ahead of budget:
Ahead of budget investors mainly focus on FMCG companies, EV companies, manufacturing companies, pharma companies and some companies in chemical sector.
FMCG companies are gaining focus because of expectation that the government might introduce schemes [like loan waiver, etc] that can help to boost the rural consumption.
Although experts say that, there is no expectations for FAME Policy in this budget, investors consider them from long term perspective.
Manufacturing companies are in focus in expectation of schemes like PLI Scheme. Even some EV stocks will be in focus in expectation of such Schemes.
There is an anticipation that the government will launch health benifit Schemes, so some pharma stocks is also expected to be in focus.
What all to expect from the union budget 2024?
Economists believe that there is very minimal chance for any reduction in income tax [direct tax]. The reason which they state is, reducing tax rates could increase the inflation. As we all know inflation has great impact on the entire economy, the government will always try to curb the inflation in order to safeguard the interest of the people of the country.
Another expectation is the increase in the deduction limit under Section 80C.
Further, this time along with capital expenditure the government would focus on revenue expense too. However as usual, defense will be mainly focused and also the railways.
Many experts and other people have recommended to increase the budget allocation towards education. It is stated that, a substantial portion of educated people are unemployable [that is they lack proper skills required for the employment]. So there is a high chance for increasing the budget allocation towards education, thus time.
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