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How the 2024 Budget Could Propel Stock Market Growth

Jun-24-2024Blog by – Mr. Keval Lakhani (Chartered Accountant - Research)Read Time: 3 Min.Word Count: 368
11How the 2024 Budget Could Propel Stock Market Growth

As Budget Day 2024 approaches, investors are eager to see how the coming financial plan will influence the stock market. Here are some possible good outcomes:


Tax reforms:


Personal Income Tax Relief: If the budget includes higher exemption levels or lower tax rates for people, disposable incomes may grow, resulting in increased consumer expenditure. This increase in consumption might benefit industries such as retail, FMCG (Fast-Moving Consumer Goods), and automobiles, driving up stock prices.

Corporate Tax Cuts: Reducing corporate tax rates or providing incentives to firms could boost profits and promote investment. This is likely to result in higher stock valuations, especially for corporations in capital-intensive industries like manufacturing and infrastructure.


Infrastructure Spending:


Significant investment in infrastructure projects can boost economic growth by creating jobs and raising demand for goods and services. Companies in the construction, cement, steel, and logistics industries may see their stock values climb as revenues and earnings outlooks improve.


Social Welfare Programs:


Increased funding for healthcare, education, and rural development can boost consumer confidence and purchasing power, particularly in rural areas. Companies in the healthcare, education, and consumer goods sectors may profit from higher demand, boosting their stock performance.


Green & Sustainable Initiatives:


Investments in renewable energy, electric vehicles, and sustainable practices can provide new growth opportunities for businesses in these industries. Stocks of companies involved in green technology, solar power, wind energy, and electric car production may rise significantly as a result of favorable government policies and incentives.


Market Sentiment and Foreign Investment:


A balanced budget that prioritizes fiscal discipline while encouraging growth might improve overall market sentiment. Positive sentiment can attract both domestic and foreign investors, boosting stock market liquidity. Banking, financial services, and information technology, which frequently attract major foreign investment, may face an increase in demand.


Conclusion

Strategic tax reforms, more infrastructure expenditure, improved social welfare programs, and a strong emphasis on sustainability have the potential to boost the stock market in 2024. Investors will be keenly watching these developments, and sectors poised to benefit from these measures could see notable gains, driving overall market performance.


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