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PL Capital Report
Budget 2026-27 has carried forward the foundations and work being done in past few years by focus on -
- creating Infrastructure to push trade and manufacturing
- Defence production for security needs,
- Rural and urban Infra and
- social welfare ( schemes like G Ram G (MNREGA), Food security, agricultural subsidies and PM Kisan etc).
The focus remains on making India a global hub for manufacturing, tourism, defence and technology. Government has been able to hold on to fiscal targets (4.4% of GDP) despite major rationalisation in both income tax and GST rates in a single year is a big positive. It has been achieved by expenditure reduction on revenue account and 3% lower central Govt capex and much lower expenses by states on capex.
Govt has refrained from any fancy assumptions for FY27 as it is assuming around 10% higher tax collections, 2% decline in GST, 15% excise increase (led by cigarette excise duty). Overall capex has been increased by 12% and including grants to states there has been 22% higher proposal for capex.
As the benefits of last year's reduction in Income tax, GST and interest rate cuts is yet to fully play out, 10% nominal GDP growth and 4.3% fiscal deficit have room for a positive surprise if global geopolitical situation stabilizes and India US tariff issue gets resolved.
Markets have been spooked by lack of any direct announcements unlike last year, increase in STT rates on F&O and dashed hopes of LTCG reduction for FII's. However, PL Capital believes that the Budget carries forward the focus on Infra, renewables, defence, logistics clusters, tourism, value added farming, data centres etc which will help economy sustain strong growth momentum.
The brokerage believes bottom-up approach will be a better way to play the current uncertainty and remains constructive on banks, NBFC, automobiles, select staples, jewellery, select durables, hospitals, defence, ports and telecom stocks.
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Also Read: Budget 2026: Jefferies India Calls It 'Pragmatic' But Sees No Major Market Triggers
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