Indian equities are unlikely to find a decisive direction from the 2025-26 Union Budget, as fiscal constraints and global uncertainties keep sentiment subdued. The market will react to headline announcements, but any impact is likely to be short-lived. Liquidity conditions, earnings performance, and external factors will play a bigger role in dictating market movement beyond budget day.Tight liquidity conditions in the banking system are capping market upside. RBI data show that bank credit growth slowed to 11.5% as of January 10, down from 16.0% a year ago. Systemic liquidity is at its tightest in over a decade, affecting margin financing and reducing credit flow to non-bank finance companies, which play a key role in consumer lending.
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