● Budget is focusing on sustainable growth: The Budget gives impetus to growth with sharp increase in capital spending. Capital expenditure is projected to grow at 37.4% in FY24 led by railways, roads, state capex transfers and clean energy

● Equity asset class would be preferred: The Budget emphasized on stability and continuity of policy with no change in the capital gains tax regime and withdrawal of various tax arbitrage avenues for High Networth individuals. This will incentivise flow of savings into capital markets. Lower borrowing program of centre amid fiscal consolidation and expected lower supply of bonds from states will ensure yields remain benign in FY24. This should help valuation of equity markets

● Global rate hikes pace to slowdown: Rate hike cycle is expected to near its peak and would see slower hikes and tapering going forward if news on inflation front remains positive. For India, RBI has projected headline inflation at 6.8% in FY23 outside its target range and would continue to mirror its rate hikes with FED.

● 3QFY23 results review: Among the results declared so far, companies across sectors sounded cautious on future outlook given uncertainties however demand weakness is still not materially visible. Entire banking space weighed on the incremental profit pool, supported by strong credit growth, lower provisioning and improved asset quality; PSBs outperformed by wide margins after strong revival in performance and improved asset quality. Entire PSU space has seen strong revival after a weak decade and their valuations catching up.

● Margins expansion has started to play out:Post severe commodity cost pressure of 1HFY23, margins for most of the companies have started to improve sequentially. With cooling down of global commodity prices from its peak; auto, cement, consumer and metals are the key beneficiaries with benefits of lower raw material costs and easing supply chains coming with some lag.