Perspective on Union Budget By Karthick Jonagadla, investment manager on smallcase and Founder and CEO of Quantace Research
Below Perspective on Union Budget by Karthick Jonagadla, investment manager on smallcase and Founder and CEO of Quantace Research
FY27 Budget reads like a “build-and-crowd-in” plan: keep the deficit on a downward path, but keep spending tilted to assets that lift productivity. For equities, that is supportive—provided bond yields stay orderly.
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The fiscal deficit is budgeted at 4.3% of GDP, while central capex rises to Rs.12.2 lakh crore and effective capex to ~Rs.17.1 lakh crore. Gross market borrowings are ~ Rs.17.2 lakh crore (net dated-securities borrowing ~Rs.11.7 lakh crore), so the market debate shifts from “will growth slow” to “how tight do yields/liquidity get” Debt-to-GDP is guided at 55.6% in FY27.
This Budget favours domestic cyclicals over defensives. Order-book visibility should remain strong in infrastructure/EPC, capital goods, cement/steel, rail-linked suppliers and defence manufacturing. States matter too: Finance Commission grants of Rs.1.4 lakh crore and capex support can keep project activity broad-based beyond the Centre.
Targeted customs/excise moves add tailwinds for energy transition (storage, critical minerals, solar inputs), nuclear-linked capex, aviation/MRO and biogas-blended CNG.
Headwinds are narrower: higher STT makes F&O-heavy models less attractive, and buyback taxation changes may push companies toward dividends. MAT at 14% for firms moving to the new regime is a modest positive.
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