Insights on Budget Strategy, Capex Growth, and FPI Outlook by Sunil Damania, Chief Investment Officer, MojoPMS
Below the Insights on Budget Strategy, Capex Growth, and FPI Outlook by Sunil Damania, Chief Investment Officer, MojoPMS
"I do not believe the Finance Minister has prioritized consumption over capital expenditure (capex). If we analyze the total capex—which includes central government spending, grants provided to state governments, and investments by central public sector enterprises—it is projected to reach Rs 20 lakh crore by FY2026. For an economy with a size nearing Rs 350 lakh crore, this level of capex is highly significant and supportive of growth.
Additionally, the market may have underestimated the significance of the ?1 lakh crore tax rebate announced in the budget. This is not a one-time benefit but a recurring relief, which will enhance disposable incomes and boost consumption over the long term. It represents a well-balanced approach combining both capex and consumption to drive economic momentum.
Regarding concerns around Foreign Portfolio Investments (FPI), we remain optimistic. While January witnessed heavy FPI outflows, we expect a strong recovery in February. This is partly due to the U.S. market appearing overvalued and facing uncertainties from tariff-related policies. As a result, capital flows to emerging markets are likely to rise, and India stands to gain its fair share of these inflows.
As for the U.S. tariffs, it remains uncertain how beneficial they will ultimately be to their economy. This is an evolving situation, and markets are likely to respond with periodic knee-jerk reactions as developments unfold."
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