March, 2026

(Im)Patient Investor

Mohit Dugar, CFA

February was jam packed with events having a lot of power to bring the Indian markets out of an almost 18-month slump. However, none of these events was able to bring a sustained bull market albeit some temporary upticks were visible.

This month started with one of the most important events of the fiscal year – The Union Budget, presented against a backdrop of sustained macroeconomic stability but uncertain global environment. India’s Real GDP growth remains remain resilient around 7%, supported by fiscal discipline, moderate inflation and a consistent emphasis on public investment. FY27 GDP is estimated to grow at 6.8%-7.2%. Budget focused on the following points:

1. Fiscal Consolidation Continues: The government has targeted a fiscal deficit of ~4.3% of GDP for FY 2026–27, maintaining its commitment to fiscal discipline while supporting economic growth.
2. Higher Capital Expenditure: Capital spending increased to about ₹12.2 lakh crore, reflecting continued focus on infrastructure-led growth and long-term economic expansion.
3. Infrastructure Development Push: Major investments announced for roads, railways, logistics corridors, and multimodal transport networks to reduce logistics costs and improve connectivity.
4. Manufacturing & Strategic Industries: Expansion of initiatives such as Semiconductor Mission 2.0 and electronics manufacturing schemes to strengthen India’s position in global supply chains.
5. Support for MSMEs: New measures including a ₹10,000 crore SME Growth Fund and liquidity support aimed at improving credit access and scaling small businesses.
6. Agriculture Modernization: Introduction of AI-driven digital platforms and initiatives to promote high-value crops, aimed at increasing farm productivity and farmer income.
7. Skill Development & Employment: Greater emphasis on skill development programs aligned with manufacturing, technology, and service sectors to enhance employability.
8. Healthcare Capacity Expansion: Plans to train over 1.5 lakh healthcare professionals and expand healthcare infrastructure across the country.
9. Tax Simplification: Introduction of a new simplified Income Tax framework expected from April 2026, along with measures to ease compliance and streamline tax processes.
10. Focus on Inclusive Growth: Policy initiatives aimed at regional development, entrepreneurship, and economic opportunities across Tier-2 and Tier-3 cities.

The Budget is expected to benefit infrastructure and construction companies due to higher capital expenditure on transport, logistics, and urban development. Manufacturing and electronics sectors may gain from policy support for semiconductor and component production. MSMEs and the banking sector could benefit from improved credit access and funding initiatives, while agriculture, Agri-tech, and healthcare may see growth driven by digital farming initiatives, high-value crop promotion, and expanded healthcare capacity.

Another big or perhaps the biggest event of this month was the much awaited US-India trade deal, which was finally announced in the first week – reducing tariffs on India to 18%. This led to a temporary relief rally with NIFTY surging by almost 3% and INR logging its best single day gain in over seven years. The trade deal focuses on the following points:

1. Tariff cuts: The United States reduced tariffs on India’s exports from about 25–50% earlier to around 18%, improving access for Indian goods.
2. Market access for US goods: India agreed to reduce or eliminate tariffs on many US industrial and agricultural products (e.g., nuts, soybean oil, fruits, wine).
3. Large US purchases commitment: India plans to import about $500 billion worth of US energy, technology, and other products over time.
4. Energy & strategic alignment: India agreed to reduce dependence on Russian oil and shift more energy purchases toward the US and partners.
5. Step toward bigger deal: This is an interim framework leading to a full Bilateral Trade Agreement (BTA) aimed at expanding trade and supply-chain cooperation.
6. Goal: Boost bilateral trade and potentially reach $500 billion trade by 2030 while strengthening economic ties.

However, now the US Supreme Court has ruled that the tariffs imposed by President Trump are illegal. He doesn’t have the authority to impose these tariffs without the US Congress’ assent. President has vowed to re-impose sweeping tariffs, but in the meantime he has used Section 122 of the Trade Act of 1974 to impose 15% tariffs on all the nations – but this can be used for only 150 days, after which some other plan has to be prepared to impose tariffs. May trading partners have also sued the Federal Government to refund the tariff levies.

US Q4 GDP numbers were also released – growth fell sharply 1.4%, missing estimates which were around 2.8%.

On the macro front, the Monetary Policy Committee (MPC) decided to keep the policy repo rate unchanged at 5.25% and retained the ‘neutral’ policy stance. Retail CPI Inflation was at 2.75%. The Government also announced that they were able to achieve the fiscal deficit target of 4.4% and have set a new target of 4.3% for FY27. Fiscal consolidation is also on track: revenue spending restraint, easing capex pace and strong non‑tax revenues significantly limit risks of fiscal slippage for FY26.

All these events were still not able to move the markets. Uncertainty is at its peak, everyday new information is coming to light. Information asymmetry is making it more and more difficult to have an edge in the market for retail investors. What matters the most now than ever is patience. This month marks almost 18-months of no returns in Indian markets; It is difficult to stay patient when the markets have stayed flat for 18-months, but it is only after such periods real wealth is built.

Stay patient and stay invested!

www.pinnaclefinvest.com

mohit@pinnaclefinvest.com

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