VK Vijayakumar, the Chief Investment Strategist at Geojit Investments, has expressed strong approval for Budget 2026, highlighting its emphasis on long-term economic growth. In an exclusive interview, he commended the Finance Minister for delivering a budget that aligns with the nation's current needs, despite initial market volatility.
Budget Assessment and Economic Outlook
Vijayakumar rates Budget 2026 with a solid seven out of ten, praising it as a growth-oriented plan that maintains fiscal discipline. He notes that the Indian economy continues to perform robustly, achieving a 7.4% GDP growth rate for FY26, which positions India as the fastest-growing large economy globally for the fourth consecutive year.
"The Finance Minister has delivered what the economy needs at this juncture," Vijayakumar stated, emphasizing the importance of sustaining growth amidst geopolitical tensions and a fragmented global order. He projects that the 7% growth target for FY27 is attainable, supported by fiscal prudence.
Market Implications and Fiscal Targets
From a market perspective, Vijayakumar points out that a nominal GDP growth of around 10%—derived from 7% real growth and 3.5% inflation—could drive a 15% earnings growth in FY27. This potential, he suggests, may trigger a modest market rally after the initial negative reactions subside, typically within a few days.
Regarding fiscal health, the government has adhered to its consolidation path, achieving a fiscal deficit of 4.4% of GDP for FY26 and targeting 4.3% for FY27. The debt-to-GDP ratio is aimed at 55.6% for FY27, underscoring a commitment to fiscal discipline without compromising growth initiatives.
Sectoral Impacts and STT Hike Analysis
A key budget proposal that unsettled the market was the increase in Securities Transaction Tax (STT) on futures and options (F&O). Vijayakumar clarifies that this move is not primarily for revenue generation but aims to discourage retail traders, 92% of whom incur losses in F&O trades. While sentimentally negative in the short term, he views this as a positive step for market stability.
Conversely, he applauds changes to share buyback taxation, treating them as capital gains and imposing additional taxes on promoters, which benefits retail investors by curbing improper use of buybacks.
Investment Strategy Post-Budget
Vijayakumar advises investors to remain invested and continue systematic investments, particularly in light of sectoral allocations. The budget allocates ₹12.2 lakh crore for capital expenditure in FY27, with defence spending increased to ₹5.94 lakh crore, supporting growth through high public capex.
He also highlights a recent crash in gold and silver prices, which has dampened speculative booms in precious metals. This development, he believes, could redirect investor interest toward equity markets.
As initial disappointments over unmet tax relief expectations fade, Vijayakumar predicts the market will refocus on fundamentals. If foreign institutional investor (FII) selling pressures drive prices lower, domestically driven large-caps may become attractive buys. Domestic institutional investors (DIIs) are expected to bolster these segments, enhancing market resilience.
However, he cautions that mid and small-cap segments show pockets of overvaluation. Investors should be selective, opting for fairly valued growth stocks in these broader market areas to mitigate risks.
Disclaimer: This article is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms and not of Mint. Investors are advised to consult certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
