“…During the course of the year, a lot could come. There is a clear revenue gap due to tax cuts, but there has been enough expenditure saving and plus the RBI bonanza. RBI has sold many American securities, gold is up, so there could be a substantially larger dividend. In my opinion, numbers will still match. I do not see the government deviating from the fiscal path, and I do not expect negative surprises on fiscal consolidation next year,” Kela said.

On foreign capital, Kela noted that the Budget alone may not immediately attract inflows. “I do not 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 only 4%, but more than 300 relevant companies are down over 40% from their 52-week high. This makes the case for individual stocks and will attract both foreign and domestic investors.”

Kela also highlighted the strength of corporate India. “Mid-sized companies are delivering to expectations, with some surprises. Corporate India has healthier balance sheets than ever, and many promoters have raised capital in the past 12-18 months. Roughly five-and-a-half lakh crores have gone out of the secondary market due to primary raises and promoter sales, which has been a pressure point.”

Despite these pressures, Kela sees opportunities in smaller companies. “Because mutual funds and large investors cannot move the needle with small-cap stocks, smaller companies are becoming attractive for long-term investors. With a three- to five-year horizon, some could become acquisition targets or attract private equity. One must choose carefully—markets are not a place to be overconfident.”

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