GoalTeller

February 02, 2025 | Read Online

A very Happy Basant Panchami to Everyone! Goddess Saraswati has blessed the middle class this time around with a massive tax cut that will benefit all sections of taxpayers.

The FM has done an incredible job in ensuring the 1 lakh crore dole doesn’t impact the fiscal deficit which is pegged at an aggressive 4.4% (Hence I am still looking for any devil in the details that might crop up).

From a stock market perspective, though the indices were largely flat to negative, this budget surely helps in a) Boost consumption that was showing signs of sagging post the post-pandemic surge, b) No big devils apparently (Though we still need to look out for the new income tax policy that would be released later this week).

Presuming no big setback in the coming week, the domestic situation looks fairly positive and my belief remains that any downward movement over the next 3-6 months should be an opportunity to buy. Triggers of this downward move will continue to be global triggers largely driven by the US trade wars (They have just announced tariffs on China, Mexico, and Canada)

1m performance of Indian equities post-budget

No meaningful pattern

Some very positive developments in the budget

• The obvious one of the tax slab increase which shall result in a large sum of money (1 lakh crores) to get infused into the economy (Capital Gains and Other Incomes won’t be part of this exemption).

• Multiple ease in compliance etc viz. TDS limits on bank interests for Senior Citizens eased to 1 lakh.

• ULIP’s not under Section 10 D will be classified as capital gains (there was ambiguity here about the taxation being slab and hence this is a positive move).

• Another big event is the relief in “deemed income/rent” from a second house – this applies now to the 3rd house and onwards.

• NPS Vatsalya investments will be subject to the 50k deduction while NSS withdrawals are tax exempt.

Other developments

• The Trump administration has levied a tariff on China, Mexico and Canada and it remains to be seen how this pans out over the next few weeks.

• Deep Seek’s launch rattled the AI world globally with Nvidia crashing (Again a stark reminder that if one is investing in new-age sectors one needs to be careful and prepared for any eventuality). Diversification has become even more crucial with such rapid tech changes.

• The markets continue to linger around the crucial levels of the 23k Nifty vicinity – Our stance continues to be to deploy below 23k Nifty levels and then sit tight – though a decisive fall from here could precipitate a much larger fall.

• The coming week is important to see any retaliatory moves by the recipient countries and any big negatives from the new Income Tax Policy.