Edited excerpts from a chat:
As we head into the Union Budget amid heightened market volatility and persistent global uncertainties, what is the Street’s expectation from the finance minister?The expectation is for balance and continuity. Markets would like the Budget to keep supporting growth through infrastructure and capital spending, while staying firmly committed to fiscal discipline. A stable and predictable tax framework, along with targeted support for MSMEs and consumption, can help reinforce confidence. In a volatile global environment, clear guidance on the fiscal deficit trajectory and ease of doing business will matter more than big-ticket announcements.From a market standpoint, what specific policy measures or fiscal signals would be most constructive for equities – whether on capex push, consumption support, or fiscal consolidation?From a market perspective, clarity and consistency will matter most. A continued but measured push on infrastructure and green-energy capex can help encourage private investment. At the same time, a clear and credible path for fiscal consolidation will provide comfort on valuations. Calibrated disinvestment and targeted measures for manufacturing can drive growth without straining public finances — and that balance is what markets are looking for.
Should the government incentivise FIIs with some tax sops?Stability matters more than sops. While rationalising aspects of the capital gains framework and improving clarity around taxation could help sentiment, FIIs primarily respond to growth visibility, policy consistency, and currency stability. If the Budget reinforces these fundamentals, flows will follow. Any incentives, if considered, should be measured and aligned with India’s long-term competitiveness rather than short-term flows.Budget has been traditionally seen as a trigger for PSUs, rail, infra and defence sectors. Do you see a buying opportunity in any of the pockets before the Budget?There can be selective opportunities, but this is not a time for blanket positioning. Rail and defence continue to benefit from strong order visibility and policy support, which gives some comfort on fundamentals. However, in PSUs and broader infrastructure, valuations already reflect a lot of optimism. Investors should stay selective and focus on execution strength rather than the Budget headline.In the last year, we have seen a clear shift of focus from capex to consumption. How do you see capex-related plays going forward?The shift is more about rebalancing than abandoning capex. Consumption support has become necessary after a prolonged investment-led cycle, but capital spending remains an important growth pillar. Going forward, capex opportunities will be more selective — focused on sectors and companies with clear demand visibility and strong balance sheets, rather than broad-based cyclical plays.
Are there specific sectors or themes where earnings visibility and balance-sheet strength are strong enough to withstand near-term volatility, irrespective of Budget outcomes?Yes, and I believe these are largely driven by fundamentals rather than policy events. Well-capitalised private banks within BFSI, select consumption names with pricing power, healthcare, and defence companies with long-term order books offer relatively better earnings visibility. These sectors tend to navigate near-term volatility more comfortably because execution and balance-sheet strength matter more than Budget outcomes.
Small- and mid-cap stocks have corrected sharply. Is this an opportunity or is further consolidation needed?The correction has improved risk-reward in parts of the mid- and small-cap space, but selectivity is critical. While valuations have cooled, many stocks are still priced for perfection. A phased approach makes sense — focusing on high-quality businesses where earnings can catch up over time, rather than aggressive, broad-based exposure.
Which sectors are best placed to drive incremental earnings growth in FY26 and FY27?Earnings growth over the next two years is likely to be led by a mix of cyclical recovery and structural themes. Banking and financials, autos, cement, telecom, select consumption plays, and infrastructure-linked sectors are well positioned. What will differentiate performance is balance-sheet strength and the ability to convert demand into sustained earnings growth.
