As the economy slows down owing to rising inflation and weak wage growth, investors are looking for measures that would encourage spending, which is why Indian equities edged up during Saturday’s special session for the union budget.
At 9:38 a.m. IST, the Nifty 50 was up 0.23% at 23,561.5 points, while the BSE Sensex was up 0.28% at 77,715.96.
At 11 a.m. IST, Union Finance Minister Nirmala Sitharaman will deliver the budget to the legislature.
The more domestically orientated mid-cap and small-cap indices increased 0.7% and 1%, respectively, while twelve of the 13 major sectors saw gains.
The realty index climbed 1% amid expectations of measures boosting housing and infrastructure segments. Including the day’s move, the index has gained 10% in five sessions.
State-owned companies also gained 1%, buoyed by expectations of increased budgetary allocations.
The Nifty has lost 4% since the post-elections budget on July 23, while the mid-cap and the small-cap indexes have shed 4.6% and 8.1% due to a slowdown in the world’s fifth-largest economy that has eaten into corporate earnings and driven away foreign investors.
“The union budget is expected to take a pragmatic approach, balancing growth aspirations with fiscal discipline,” said Pranav Haridasan, managing director and chief executive at Axis Securities.
Economic growth is expected to be 6.3%-6.8% in the fiscal year starting April, a range that straddles the 6.4% GDP growth projected for this fiscal year, the annual Economic Survey showed on Friday.
The government is expected to use the budget to stimulate growth, although analysts do not expect more capital spending to be one of the levers.
“Unhinged capital expenditure is unlikely given how important balancing the fiscal situation is, despite the focus firmly on boosting economic growth,” Haridasan said.
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Indian shares rally ahead of Budget as investors hope for growth stimulus
