Budget 2026: Not a Catalyst for FII Flows; Earnings Growth Key, Says Naveen Kulkarni

• Naveen Kulkarni of Axis Securities PMS believes the Union Budget 2026 will have a limited role in attracting FII flows, as critical announcements like GST rate reductions have already been made.
• He expects the budget to balance consumption-oriented themes with capex spending, without significantly exceeding nominal GDP growth in spending.
• Kulkarni highlights that the primary concern for equity markets in 2026 will be earnings growth, which needs to accelerate to avoid negative market sentiment.
• The US Federal Reserve is highly likely to pause rate cuts in its January meeting due to elevated personal consumption inflation.
• Q3 earnings have largely met expectations across sectors, with BFSI and IT performing in line or marginally better, and double-digit earnings growth anticipated for NIFTY 50 in FY27.

Why It Matters: Budget 2026 will have limited impact on FII flows; strong earnings growth is crucial for equities.