Daily Voice: Raghavendra Nath of Ladderup Wealth Management, in a conversation with Moneycontrol, said that although the Union Budget will be beneficial for the entire economy, it is unlikely to make any major policy announcements that will impact the sentiment of the equity market in a big way. He expects the Budget to focus on continued investment in infrastructure with more focus on sectors such as housing, power and job creation rather than any major tax cuts or major stimulus measures.
He expects that due to several favorable factors, the results of Q3FY2025 may be better than the results of Q2FY2025. Raghavendra, who has over 30 years of experience, said the festive season, increase in government spending, improvement in consumer demand and wedding season could all prove to be positive for this quarter. However, they also say that it will be important to assess how the Q3FY2025 results compare to the Q3FY2024 results.
Do you believe the bond market will outperform equities in 2025?
In response to this, Raghavendra said that nothing can be said about the future of the market. Predicting the direction of interest rates and equity markets is a risky business. The situation we are in now makes a reversal in the rate cycle a good possibility. Inflation has been under control for many quarters. Growth expectations are normal. The government would like to further promote growth and credit cost can be a good means for this. Any cut in rates will immediately benefit long-term bonds.
On the other hand, we ended the year with a multi-year bull market. Markets still show high resilience and investor participation remains high. But during the last three years, we have seen a steady rise in valuations. In such a situation, we will see 2025 stock-specific movement. This year we should not expect big returns like the last two years but should expect only moderate returns. Therefore, there is a strong possibility that the bond market may be seen performing better than equities in 2025.
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Do you expect any major announcement in Budget 2025 that could impact equity market sentiment in a big way?
Responding to this, Raghavendra said that in view of the current political stability, the focus will remain on fiscal consolidation to a large extent in Budget 2025. The government has maintained emphasis on this in recent years also. This budget is presenting a big opportunity for the government to take steps towards achieving its fiscal deficit target.
Raghavendra expects the Budget to focus on continued investment in infrastructure with more focus on sectors such as housing, power and job creation rather than any major tax cuts or major stimulus measures. Historically, the markets have often had very high expectations regarding the Budget, which often leads to negative reactions later on. Raghavendra believes that the budget will be beneficial for the entire economy. There does not seem to be a possibility of any major policy being announced which could have a major impact on the sentiment of the equity market.
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