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While there were no big announcements in the interim budget 2024, many experts believe it to be positive for fixed income markets considering lower fiscal deficit targets.
Here are what experts have said about impact of interim budget on mutual funds.
G Pradeepkumar, CEO, Union MF
From a mutual fund perspective, this is a very positive signal for both long duration bond funds such as g sec funds as also for the equity funds in general. The government appears committed to increasing investment in infrastructure and to keeping a tight lid on subsidies both of which augur well for the long term growth of the economy and the stock markets.
Mahesh Patil, CIO, Aditya Birla Sun Life MF
From a market standpoint, bond markets are cheering the steep fiscal consolidation and we expect more rally in the coming quarters as India’s inclusion in the global bond index further drives demand for government of India bonds. However, from equity markets perspective, it remains neutral and does not materially change the earnings outlook in the coming year.
Manish Gunwani, Head – Equity, Bandhan MF
It is a fiscally prudent budget with conservative assumptions on tax revenues, nominal GDP etc. A big positive is the potential for interest rates to go down given the higher-than-expected drop in fiscal deficit. Overall, we believe it enhances the macro stability of the economy.
Pankaj Pathak, Fund Manager- Fixed Income, Quantum MF
Faster fiscal consolidation and consequent decline in the government’s market borrowing should drive bond yields lower and bond prices higher. Another positive aspect is that the government has pegged only a moderate growth in the non-capex expenditure. This should keep inflation under check and provide enough headroom to the RBI to cut interest rates. We expect long term bonds to do well in 2024. Investors can capture this opportunity with dynamic bond funds which are invested in long term bonds.”
Puneet Pal, Head – Fixed Income, PGIM India MF
A pleasant surprise on the fiscal deficit pegged at 5.1% against expectations of 5.3%. This will lead to lower yields as the borrowing numbers are also lower than market expectations.
Sahil Kapoor, Head - Products and Market Strategist, DSP MF
The bond market has rejoiced with a drop in yields, and rightfully so. Gross and net borrowing for FY25 are lower than FY24. The fiscal deficit is expected at 5.1% for FY25, a reduction of 0.7%. With India getting included in global bond indices and the supply of govt. securities estimated to be lower, it will lift a major hurdle for the RBI to exercise a more neutral to easy monetary policy - advantage duration funds.
