Measures to boost private consumption are limited in the Union Budget. Personal income tax related measures such as tax cuts, hike in standard deduction, and higher MGNREGA spending would have made an immediate positive impact on consumption, stated Morningstar Investment Adviser India said in a report.
The government continues to focus on boosting capex to support economic growth.
The report said that equity markets reacted positively to the budget as sectors such as capital goods, steel, cement and healthcare are expected to gain from the measures announced.
Thrust on capital expenditure led by government, improving export attractiveness, low cost of credit, expectations of increased consumer spending, and housing market recovery with improving affordability levels are expected to support high corporate earnings growth (20-24 per cent) expectations for FY2022-24.
"After hitting lows in March 2020 at the onset of the pandemic, markets witnessed a strong recovery largely driven by cyclical sectors, making valuations look stretched, particularly for mid and small-cap equities," the report said.
The report said, "Our valuation implied return estimates for markets and asset classes, when compared to its long term or fair return, helps us decide whether the market/asset class is attractively priced. class is attractively priced."
(With inputs from IANS)
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