Budget to boost consumer spending; market to gain as much as 20%: Survey

The upcoming full budget is expected to boost consumer spending and infrastructure building, which in turn is likely to propel the soaring share market to gain as much as 20%, reported Bloomberg. The report quoted market watchers and said that the market will gain, buoyed by government spending and continued momentum in corporate earnings

Share market to gain

Bloomberg surveyed about 24 respondents and more than half of them estimated that the NSE Nifty 50 Index may advance up to 26,000 points by the end of 2024, while one predicted the gauge can climb even more. So far this year, the benchmark index has risen 12% to hit a record high. 

Investors have raised their bets in the consumer sector on expectations the government will shift toward more populist measures as Prime Minister Narendra Modi led BJP failed to secured majority in the Lok Sabha polls. 

Meanwhile an early monsoon has also boosted the prospects for companies involved with crops such as rice, corn and soybeans.

“Corporate earnings for the year gone by had been robust on the back of margin tailwinds and may grow above trend in financial year 2025, keeping India’s medium-term growth story intact,” Bino Pathiparampil, head of research at Mumbai-based Elara Capital told Bloomberg.

As per datat compiled by Bloomberg Intelligence, analysts estimated earnings per share of MSCI India Index’s companies for all of calendar year 2024 to increase 15.6% on-year. In comparison, Chinese firms are expected to post a 10% rise in their EPS for the same period.

A quarter of the respondents who were surveyed had said that the capex push would be the government’s main priority. Another quarter thought boosting consumer demand would be on top of their to-do list.

“The government can please everyone with higher capex, social spending and yet a tighter fiscal,” thanks to larger tax revenue and bumper dividend payout from the central bank, Jefferies Financial Group Inc. strategists including Mahesh Nandurkar wrote in a note on June 24.

Also watch: Sensex surges past 80,000 mark in record time, Nifty nears 24,400