Any positive move in the market recently would be seen as a pre-Budget rally as global cues are not great nor is the domestic footprint of the Indian economy, said Sunil Subramaniam, managing director and chief executive officer of Sundaram Mutual Fund.

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“There is clarity in the market that the government has the power to act. Although the fiscal space is not great, some announcements could help rekindle interests in the economy, growth from the private sector,” he said.

According to him, the market will be okay with a slight slippage in the fiscal deficit because the growth needs to be revived. Maintaining the fisc may be good for our country’s credit rating and FII flows but the stock markets will respond to growth, he added.

Even if the government were likely to widen the tax bracket or take some steps to increase tax collections in the upcoming budget, it would be directed towards expenditure to boost growth and not to maintain the deficit. Moreover, the giveaways would not be in populist measures but more towards boosting growth, employment etc., said Subramaniam.

The agenda of the government would be to focus on infrastructure and so there could be some sort of tax benefits for raising money for infrastructure spending, he said. Secondly, since the NBFC crisis affected growth, the government would try to create availability for finance to small and medium sector, which in turn would finance the capex cycle and infrastructure creation, he said.