Stock market investors expect balanced budget, focus on job creation, infrastructure spending

Stock markets have been subdued in the run-up to the Union Budget with BSE's benchmark Sensex is almost flat so far this month

Stock market investors are expecting a balanced Budget with a focus on job creation, increased spending on infrastructure, reigning in the deficit, and bringing the economy back on track, experts said on January 25.

Stock markets have been subdued in the run-up to the Union Budget with BSE's benchmark Sensex is almost flat so far this month. Even the corporate earning season failed to excite the markets, while some indices like IT and bankex have seen some positive movements.

The muted performance of the markets could be due to Foreign Portfolio Investors (FPIs) moving funds out of India as they are looking for emerging markets with cheaper valuations. They have taken out over ₹16,500 crore from domestic equities so far this month.

Moreover, inflation and possible global recession continue to play on investors' minds.

Narendra Solanki, Head- Equity Research Anand Rathi Shares & Stock Brokers, said that investors are expected to remain focused on three key factors from the pre-election year Budget 2023, firstly equity investors are expecting a uniform tax structure for capital gains which might help taxpayers to have more disposable income.

Secondly, investors will be looking for fiscal consolidation which is necessary for financial stability in the economy and thirdly, investors are contemplating policy reforms to rationalise bottlenecks for growth such as subsidies, a clear roadmap for disinvestment targets and expediting the much-awaited PSU privatisation or consolidation, he added.

History suggests India's shares are likely to see muted trading ahead of the union budget reading, usually held on February 1.