Budget may push Indian stock markets even higher, predicts new survey

The Indian stock market may gain as much as 20% for the entire year owing to government spending and continued momentum in corporate earnings, as per market watchers. A survey by Bloomberg revealed that upcoming budget will likely boost consumer spending and infrastructure building as more than half of the 24 respondents estimated that the NSE Nifty 50 Index may advance up to 26,000 points by the end of 2024. One predicted that the index can climb even more. The benchmark index has risen 12% so far this year to a record.

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Bino Pathiparampil, head of research at Mumbai-based Elara Capital, said, “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."

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Out of those surveyed, 13 projected earnings growth for Nifty components to remain robust while five said optimism on future earnings was overdone. Analysts estimated earnings per share of MSCI India Index’s companies for 2024 to increase 15.6% on-year in contrast with Chinese firms' 10% predicted rise.

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Analysts also said that capital expenditure would be the government’s main priority in the budget while some said that 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 wrote in a note. The budget will be positive for the sectors related to affordable housing, capex plays, consumer and rate-sensitive businesses, the brokerage said.