Key takeaways

• In the FY26-27 Union Budget, the government guided towards a slower pace of fiscal consolidation, and continued its thrust on capex and slightly higher-than-expected borrowing.
• The Reserve Bank of India (RBI) is unlikely to cut interest rates at the upcoming Monetary Policy Committee (MPC) meeting on 6 February, given that inflation seems to be trending higher towards its target range.
• The Budget was largely mixed for Indian equities. Commitment to fiscal consolidation and the announcement of taxation of buybacks at the capital gains tax rate are structural drivers. The hike in the Securities Transaction Tax (STT) is likely to be a negative for equities. We favour domestically oriented sectors, including consumer discretionary, financials and industrials. Indian local currency bonds continue to offer attractive absolute and relative yields, as well as diversification benefits due to their lower correlation with global bonds.

Please refer to the full report for details about the event and our investment view.

https://www.hsbc.com.my/wealth/insights/market-outlook/special-coverage/union-budget-provides-a-supportive-backdrop-for-long-term-growth/