Indian markets provide value as budget to keep fiscal trajectory intact: Madhusudan Kela

Delhi: With the Budget around the corner, market veteran Madhusudan Kela expressed confidence that fiscal discipline will continue while highlighting the opportunities arising from market corrections.“…There could be a lot to come over the course of the year. There is a clear revenue gap due to tax cuts, but there has been enough spending cuts and plus the RBI bonanza. The RBI has sold a lot of US securities, gold has risen, so there could be a substantially larger dividend. In my view, the numbers will still be in line. I don’t see the government deviating from the fiscal path, and I don’t expect any negative surprises on fiscal consolidation next year,” Kela said.

On foreign capital, Kela noted that the budget alone may not immediately attract inflows. “I don’t know what the Budget can really do to attract that capital. India has underperformed globally over the last 12 months. But now, after 18 months of consolidation, individual stocks are becoming attractive. Nifty is down just 4%, but over 300 relevant companies are down over 40% from their 52-week highs. This applies to individual stocks and will attract both foreign and domestic investors.”

Kela also highlighted the strength of Indian business. “Mid-market companies are meeting expectations, with a few surprises. Corporate India has healthier balance sheets than ever, and many promoters have raised capital in the last 12 to 18 months. About five and a half crores have disappeared from the secondary market due to primary raises and promoter sales, which has been a pressure point.”

Despite this pressure, Kela sees opportunities in smaller companies. “Because mutual funds and large investors cannot compete with small-cap stocks, smaller companies become attractive to long-term investors. With a three- to five-year horizon, some of them could become takeover targets or attract private equity. You have to choose carefully: markets are not a place where you should be overconfident.”

Kela’s view underlines cautious optimism and encourages investors to focus on selective long-term opportunities as India balances fiscal priorities and global market uncertainties.