scorecardresearchBeat or missed expectations? Here's what brokerages have to say about Budget

Beat or missed expectations? Here's what brokerages have to say about Budget '22

Updated: 02 Feb 2022, 01:46 PM IST

Okay the Budget is out and a lot of commentary has already been written on it. You have read most of it, too. A day later, it's the time for research firms and brokerages to detail what they think of the Budget. Let's take a look

Union finance minister Nirmala Sitharaman at Parliament for the presentation of the Union Budget. (PTI)

Union finance minister Nirmala Sitharaman at Parliament for the presentation of the Union Budget. (PTI)

Finance Minister Nirmala Sitharaman presented the Union Budget for FY23 in the parliament yesterday (Feb 1). In this budget the government increased its capital expenditure, focussing more on sectors like infrastructure, defence. It also announced no changes in the income tax slab and 30 percent tax on the transfer of virtual assets.

Let's take a look at what the brokerages make of the latest Union Budget:


Rather than the measures announced in the Budget proposal, it is the things not done in the Budget by the government that enthused the markets, the brokerage wrote in its report.

Firstly, the government has avoided populism ahead of the state elections but enhanced the focus on productive expenditure.

Secondly, it has avoided the temptation to further tax rich and wealthy to balance the skewed nature of the economic recovery. No additional tax burden has been imposed on the middle class.

Thirdly, the government has also not tinkered with long-term capital gain tax and has largely kept the tax regime stable.

Lastly, Sharekhan wrote: but more importantly, the government did not take an aggressive stance on fiscal consolidation but has rather chosen to focus on addressing supply-side issues and increasing spending on creating productive assets.

BofA Global Research

Continuing its policy from the last budget, the government has again decisively opted for a capex-led growth push, while emphasizing a focus on logistics infrastructure, Make in India, ESG & Digitization themes. Significant demand stimulus was largely missing. We hence reiterate our preference for an investment over a consumption theme for CY21. We prefer capex-facing industrial companies like L&T, Bharat Electronics, Cummins India; PSBs like SBI, BoB, large private banks like HDFC Bank, ICICI Bank, Axis Bank, and cement firm Ultratech.

"Wondering what is 'capex'? It's financial lingo for capital expenditure. Simply put, the money government will spend to build infrastructure like roads, ports, etc in the country."

Motilal Oswal

Resisting the temptation of populist giveaways ahead of the five state elections in Feb-Mar’22, the government has largely remained on track with a focus on long-term structural growth drivers. Overall from an equity market perspective, we believe the budget, on balance, has no unpleasant surprises while there remains some room for further capex/spending push as the government is likely to overshoot its revenue targets. While there could be some disappointments on the absence of measures to improve consumption, economic recovery in FY23 coupled with vaccination progress would continue to drive demand recovery ahead. We prefer BFSI, IT, Consumer, Telecom, Metals and Cement while we are Underweight on Auto and Energy in our model portfolio, Motilal Oswal said in its report.

Prabhudas Lilladher

The budget has carried forward the growth momentum by increasing capital expenditure while maintaining financial prudence. There is a focus on Infrastructure development, digital and emerging technologies to propel equitable growth. The budget has laid emphasis on developing rural India by way of education, digital transformation, basic amenities like water, housing, sanitation, etc., which along with improved mobility and banking through 0.15 million post offices will promote financial inclusion.

We believe that it is a growth-oriented and bold budget given a not so conducive environment with rising crude prices, global inflation, geopolitical uncertainty, supply chain disruptions and hawkish stance of the federal reserve. We believe such an environment can increase inflation and pressurize currency even as the govt is targeting growth by playing on the front foot. We believe 2022 will be a stock pickers market and easy money-making is over.

HDFC Securities

The Budget is growth-inducing and does the heavy lifting by sharply increasing capital expenditure. The focus on boosting manufacturing as well as an underlined emphasis on areas such as startups, modern mobility and clean energy, shows the FM has prioritised long-term growth. Individual taxpayers may feel a bit disappointed with the lack of direct tax cuts but this Budget lays the ground for a multi-year growth boom. The FY23 fiscal deficit has come in higher than expectations. Let’s hope the interest rates and inflation do not remain high for long.

Axis Securities

FY23 Union Budget has lived up to the expectations of a growth-focused budget that rightly emphasized the quality of expenditure while achieving robust economic growth. While the budget continued to address the supply-side constraints, the focus on demand-side challenges was lower than expected. Nonetheless, it is important to note that the budget expenditure is on elevated levels vis-à-vis government spending in FY21 and FY22, which should help in delivering broad-based growth moving forward.

Kotak Institutional Equities

The FY2023 union budget rightly focuses on (1) sustaining economic recovery through demand-side measures and (2) supply-side reforms with the objective of kick-starting the investment cycle, which is critical for India’s medium-term growth prospects. The government has budgeted a 5 percent growth in expenditure, a13 percent decline in rural expenditure and a 24 percent increase in capital expenditure versus FY2022RE (revised estimates) levels.

Phillip Capital

The fiscal deficit was reasonably higher than our expectations, primarily led by a higher capex. Other estimates were largely in line. As expected, the budget touched upon/focused across sectors and segments, incrementally setting up a base for future reforms and policies, along with continuity of earlier reforms. Focus on Aatmanirbhar Bharat, boosting manufacturing

and exports, and incentivising green technologies were the overarching themes of the budget (as expected). These policies and reforms are quite positive in the near/long term and will aid economic growth.

Budget 2022 Highlights: Key takeaways from FM's Budget speech

Geojit Financial Services

It is a long-term growth-oriented budget that the market has welcomed given no headroom for cautiousness & populist measures. It is expected to support growth in the future; however, it is missing some balancing measures in the context of the current inflationary & slowing economy. Supportive measures were needed for rural, agricultural, low taxpayers & for sectors impacted by the pandemic. High capex, fiscal deficit & borrowing plans in the background of high inflation, commodity & oil prices and rising interest rates will be challenges in the short to medium term.

Julius Baer India

The Union budget 2022-23 continued the focus on 'quality' expenditure and increased the capex by 35percent which is ought to have a multiplier effect on the economy. Apart from public-private investments, clean energy focus is amply clear with additional allocation to Solar PLI and policy around battery swapping. Issuance of green bonds and promotion of GIFT great move to attract global investors.

On the consumption front, there is a bit of disappointment as there is no direct stimulus to spur growth and no major announcement on privatisation and the overall divestment targets are underwhelming. Finally from a taxation perspective, ‘No news is good news’. Capital gains surcharge reduction for unlisted equity and debt is a positive development.

Religare Broking

The government has re-emphasized its focus on growth through the Union Budget and positively surprised many with a sharp increase of 35 percent in allocation for capital expenditure in key sectors like Infra, housing, defense and agriculture, etc. Moreover, the focus is also on inclusive growth as several measures were announced to ease supply-side issues and promote domestic manufacturing.

At the core of all these announcements, the continuous push towards digitization shows their commitment to assuring inclusion. Amid all, the government also intends to get the fiscal deficit down albeit at a slow pace as anticipated. Overall, while there was little relief on the personal income tax front i.e. capping of surcharge on LTCG and easing of tax compliance, with no other negative surprises, we believe the focus on spending more would create employment opportunities and help in kick-starting the investment cycle which in turn would help to strengthen the economic growth.


Overall, we believe the Budget couldn’t have been better given the current situation. There are challenges all around, but the Finance Minister has put forth a forward-looking Budget. Be it increased push on digitisation, commitment to build infrastructure, or putting technology to use for a greener and cleaner future - the measures announced will likely ensure sustained growth in the coming months and years.

First Published: 02 Feb 2022, 01:08 PM IST