CNI Research’s Outlook for Budget 2024

CNI Research’s Outlook for Budget 2024/iStock

CNI Research’s Outlook for Budget 2024

Kishor P Ostwal, CMD of CNI Research Ltd., foresees a positive trajectory for the Indian stock market, expecting the Nifty to reach heights of 23000 to 24000 before elections. CNI Research emphasizes the ongoing economic positivity on various fronts, projecting a robust FY25 earnings growth exceeding 30%.

Favorable Valuations and Market Dynamics

Nifty’s current Price-to-Earnings (PE) of 19 (One year forward) is considered attractive by CNI, especially when compared to the 33-year average PE of 25. The valuations are seen as favorable, supporting the view that the budget will propel Nifty to higher levels. CNI Research suggests that with an anticipated increase in investors to 25 crores, small caps and mid caps will garner special attention.

Market Stability and Institutional Landscape

CNI Research downplays the threat of market distortion, highlighting the balanced position of Foreign Portfolio Investors (FPI) with an Asset Under Management (AUM) close to $750 billion, complemented by Domestic Institutions (DII) holding $700 billion. The PSU sector, notably LIC, stands as a substantial stakeholder with a $566 billion share in AUM.

Key Fiscal Highlights and Growth Expectations

The fiscal deficit, as per CNI Research, is under control, targeted at 5.9% of GDP in 2023-24. The government aims for a steady reduction to 4.5% by 2025-26. CNI anticipates a bright outlook, with nominal GDP expected to grow at 11.8% in 2023-24. The government’s financial position, driven by robust tax revenues, has led to expectations of a budget expansion by 10% to ₹50 lakh crores.

Strategic Economic Measures

Efforts to boost tourism in the GDP are noted, with the potential to elevate India’s GDP growth to 8% in the coming years. CNI Research sees the possibility of full convertibility, paving the way for India’s foreign exchange reserves to reach $1 trillion. Expectations include a gradual increase in tax slabs for individual taxpayers, aligning with the realization that lower tax rates can result in higher revenue.

Digital Transformation and Tax Base Expansion

CNI Research acknowledges the widening tax net, highlighting the disparity between the number of taxpayers and the growing Demat account holders and investors. The focus on continued digitization is seen as instrumental in curbing the parallel economy, ensuring increased online transactions and better GST compliance.