Ahead of the Budget 2025, Pankaj Tibrewal of IKIGAI Asset Manager stated that fiscal deficit targets and growth initiatives are likely to take centre stage.
He expects the government to cap the fiscal deficit at 4.5% for the time being and prioritise growth-enhancing measures. Tibrewal stated the importance of expanding the economic pie to accommodate the government’s significant expenditures, such as interest, wages, and pensions, which make up 75-80% of Budget 2025.
Tibrewal further stressed the need for a stronger focus on capital expenditure (capex) and investment, which have been relatively modest in previous years. He saw this as a critical step for driving long-term growth.
Harish Krishnan from ABSL MF felt that while a boost to the demand side is important, it is likely to come from measures outside the scope of the Union Budget.
While there may be some relief for lower-income groups, such as through adjustments in the new tax regime, significant efforts to stimulate demand are expected to be addressed beyond the budget framework.
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Market experts are shaping their expectations and investment strategies based on a cautious outlook.
Anish Tawakley of ICICI Prudential MF advocated for a long-term investment perspective. While he refrained from predicting short-term market movements, he expressed confidence in the broader economy’s fundamentals.
He saw a potential recovery in earnings growth over the next three years, making large-cap stocks an attractive investment for a medium-to-long-term horizon. However, he remained cautious on small- and mid-cap stocks, suggesting that the risk-reward trade-off currently favours large-cap investments.
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Tibrewal emphasised that investors are entering the period with low expectations from the forthcoming budget, following a significant market correction. While the index has dropped by 14-15%, individual stocks have seen larger declines of 30-40%, signalling that much of the excess has been wiped out.
Tibrewal saw this as a positive, noting that the solvency concerns that plagued previous market cycles are not as prominent this time. Instead, the focus is on growth and valuations.
With growth likely to resume and valuations corrected, he saw a potential for upside, though he cautioned that the “easy money” era is over and did not expect returns like those of the last few years.
For full interview, watch accompanying video
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(Edited by : Shoma bhattacharjee)
