Indian equity markets are likely to witness a bull run, in case the government decides to go ahead with the rationalization of the tax slabs.
The logic behind it is: The increased tax-free slabs means more disposable income for consumers, which is likely to boost consumption. An increased consumption means better earnings per share of the listed companies, which would make the investors upbeat about the scrips.
In the case of the rationalization of the tax slabs, the FMCG scrips, like HUL and Dabur, are likely to benefit the most.
Going into the Budget 2020, the markets have been weaker than they were in Budget 2019.
In the previous budget, the markets were witnessed the bull-run on the back of re-election of the Prime Minister Narendra Modi. However, as the government decided to impose the increased surcharge on the super-rich people, the markets witnessed a huge capital erosion.
This time around, the outbreak of Coronavirus has weighed heavily on the global indices. Both the benchmark indices -- BSE Sensex and NSE Nifty – have witnessed correction in the past couple of weeks.
A day before the budget, foreign funds pulled out heavily out from the Indian equities. FIIs withdrew Rs 4,179.12 crore on a net basis on Friday.