Bulls, battered by 4 months of relentless selling on Dalal Street, flexed some muscle as leading shares bounced sharply from 7-month lows ahead of the annual Budget presentation.
"This is just a relief rally," Arun Kejriwal, a well-known HNI investor, told Business Today. "The good part this time is that there are no expectations from the Budget, therefore, there can be no disappointment."
Some parts of the market have shot up amid thin trade over the last four sessions as they partially revert to the mean and some amount of value buying pushes prices higher.
Nevertheless, Indian markets are travelling light into the budget that will be presented by Finance Minister Nirmala Sitharaman on Saturday. India's benchmark 50-share Nifty index had corrected about 13 per cent this week, to a 7-month low, from its all-time high in late September 2024.
This is primarily on the back of sustained selling by foreign investors, ultra-HNIs and family offices as stocks were pregnant with lofty expectations and millions of new investors bought blindly into the 'India-Story'.
Coming back to the budget, analysts expect the finance minister to focus on increasing tepid private consumption, boosting stagnant capital expenditure and putting more money in the hands of a squeezed middle class that’s caught in a pincer move of high inflation, fewer job opportunities and stagnant wages.
Mumbai-based Kejriwal expects Sitharaman to focus on easing tax slabs to provide more money in the hands of the poor and the lower middle class.
"This will lead to a spurt in consumption-led spending," he said. "There is no scope for incremental taxation."
Broadly, the finance minister is likely to raise outlay for Railways, Defence and the 'Make in India' theme in her budget speech. Her ministry introduced the Economic Survey in Parliament today, which expects Indian GDP to grow 6.5-6.8 per cent in the year to March 2026.
Despite unabated selling by deep-pocketed investors, by and large, retailers remain optimistic about the long-term prospects of Indian equities as they continue to pour record money each month into Dalal Street.
Let's hope their faith is rewarded by the finance minister!