Union Budget likely to be neutral to negative for equities: Anand Rathi

NEW DELHI: Domestic brokerage Anand Rathi said the Union Budget 2022 could be neutral to marginally negative for equities in the near term, but positive for the bond market.

In a short note, the brokerage said the Indian economy remains fragile and growth volatile, yet it expects the start of fiscal consolidation in this budget.

The fiscal deficit target is likely to be around 5 per cent in FY23, down from 9.4 per cent in FY21, it said.

"At the same time, both economic reality and political exigencies may nudge the government to roll out more supportive schemes for agriculture, the rural economy, micro, small and medium enterprises and social sectors," it said.

The brokerage said that Indian corporates are doing much better than the overall economy, thanks to measures such as a corporate tax-rate cut, Aatmanirbhar Bharat and production-linked investment schemes.

"We expect these to continue rather than fresh measures for corporates. Support to laggard sectors such as hospitality or transportation are more likely to be through easily accessible funding. The government is attempting to boost growth through investment rather than consumption. This stance is likely to continue," it said.

Fiscal would be the main policy tool to foster growth, it said amid global inflationary concerns.

"With better-than-anticipated revenue receipts, especially customs and direct taxes, and relatively contained spending so far, there is elbow room to maintain large fiscal accommodation," it said.

Here's how Nifty50 performed historically before Budget and after Budget: