Budget & the Stock Market: What the government’s Capital Expenditure tells equity investors about the sectors to target

The number that hogs the headline when the Union Budget is presented is, of course, the fiscal deficit. But once the headlines fade, the market and the economy are shaped by a quieter, more structural question: What has the government chosen to build? The answer to that question is to be found in Capital Expenditure. Capex is government spending that creates assets or reduces liabilities, and has a longer economic afterlife than day-to-day running costs. And when capex is high, it benefits some sectors and companies directly.