Brokerages' thumbs up to Budget but for capital gains tax curveball

As markets sift through Budget fine print, they also monitor Q1 earnings, monsoon trends, global cues

- PUNEET WADHWA

Most brokerages have given a thumbs up to the Budget proposals, except for the sweeping changes in the capital gains tax regime, which they feel can set the cat among the pigeons in the equity and real estate asset classes.

Over the next few days, as the markets read and take in the Budget fine print, they will also keep an eye on the ongoing April-June quarter earnings season (2024-25), the progress of the monsoon back home, and the policy actions of the Reserve Bank of India.

Globally, developments related to the US presidential elections, the geopolitical situation, and crude oil prices are some of the factors that can sway market sentiment.

Meanwhile, here is how leading brokerages have interpreted the Budget proposals:

Goldman Sachs

The government ticked all crucial macro-prudential boxes. Revenue targets look broadly achievable and tax assumptions realistic. The Budget promised a policy framework for long-term economic development to set the scope for the next generation of factor market (land, labour, capital, and technology) reforms in conjunction with state governments.

We remain positive on Indian equities given macro resilience and strong earnings delivery, which should keep their relative appeal intact despite elevated valuations.

Continue to favour domestic sectors, including rural infrastructure, energy security, tourism, and housing, which align well with the measures announced in the Budget.

Morgan Stanley