Budget 2024: Five Things the Indian Stock Market Hopes for from FM Nirmala Sitharaman

As Finance Minister Nirmala Sitharaman prepares to present the Union Budget for 2024-25, the Indian stock market has its own set of expectations from the Modi 3.0 Government. Experts in the stock market are hoping for the continuation of existing government policies and have a few specific demands.

Here are the top 5 things the Indian stock market is looking for in the upcoming budget:

1. No Change in Capital Gain Tax: The Indian stock market has long demanded the removal of the Long Term Capital Gain (LTCG) Tax. However, there are rumors that the government might change the capital gain tax structure, which could mean higher taxes for investors. Avinash Gorakshkar, Head of Research at Profitmart Securities, says that keeping the current capital gain tax structure unchanged would be better for the market. If changes are made, they should only include removing the LTCG tax.
   
2. Continuation of Policies: With the Modi 3.0 government being a coalition, there is talk of populist measures taking priority. However, the market prefers a focus on growth-oriented policies. Gorakshkar mentions the importance of continuing work in areas like infrastructure, railways, power, and energy, where the government has made significant progress in the past decade.
   
3. Growth-Oriented Policies: Sugandha Sachdeva, Founder of SS WealthStreet, expects the budget to include reforms that promote sustainable growth and improve social welfare. This could involve funding for agriculture, infrastructure, healthcare, railways, renewable energy, real estate, defense, logistics, and tourism. Changes to income tax slabs or an increase in the standard deduction under the new tax regime to boost disposable incomes would also be welcome. Measures to manage the fiscal deficit while ensuring adequate funding for development projects are anticipated.
   
4. Divestment of Public Sector Units (PSUs): Investors are looking for the Modi Government to take a more aggressive stance on divesting PSUs in its third term. According to Gorakshkar, successful divestment plans can improve corporate governance and unlock value.
   
5. GST Optimisation: The Goods and Services Tax (GST) has been a significant reform for the Indian economy. Saurabh Jain, Vice President of Research at SMC Global Securities, notes that there are calls for optimizing GST, particularly by lowering rates on essential items like cars and appliances. Reducing GST rates on certain products could boost consumer demand, increase sales, and benefit related sectors. Corporates, which play a major role in the stock market’s growth, are hoping for GST-related announcements from the Finance Minister.

In summary, the Indian stock market is looking for stability in tax policies, continued growth-focused initiatives, strategic divestments, and thoughtful GST optimizations in the upcoming Union Budget 2024-25.