The Union Budget 2025 has set the stage for stock-specific growth amid market volatility, according to veteran investor Madhusudan Kela. The unexpected changes, especially the revision of tax slabs up to Rs 12 lakh, have provided a boost to consumer sentiment. Kela noted that the major impact of this budget would be the surge in consumption driven by the middle class.
With the government offering around one lakh crore rupees in tax relief, consumers now have more disposable income. This is likely to lead to increased expenditure on housing and personal capital expenditures. The government’s conservative economic assumptions are expected to result in significant economic expansion with a targeted double-digit growth rate and a 14-15% surge in tax collections.
The current budget suggests that the “Consume India” theme may gain traction, pivoting investor interest towards sectors related to consumer goods, FMCG, and white goods. The tax cut is expected to have a multiplier effect on the economy. The additional disposable income in the hands of consumers could lead to a surge in demand across various segments, including FMCG, white goods, and possibly hospitality sectors.
Key sectors poised to benefit from the new budget include agriculture, capital goods, cement, consumer, financials, telecom, and utilities.
Consumer spending boosts economic sectors
The increase in infrastructure capital expenditure is expected to provide a boost to sectors directly related to infrastructure development.
The agricultural sector is also expected to benefit from increased allocations for agricultural subsidies and investment in rural infrastructure. Consumer and financial sectors are seeing anticipation of improved stability and growth, while telecom and utilities are projected to thrive due to increased investments. Market analysts suggest that diversifying portfolios to include stocks from these advantageous sectors could potentially maximize returns.
However, it’s important for investors to stay updated with the latest financial news and market trends. Indian benchmark stock market indices closed flat after Saturday’s market session as investors reacted to the Union Budget 2025 capex numbers. The budget announcements fell short of market expectations, with economists and investors anticipating a higher capex allocation amid a slow-growing economy.
Sugandha Sachdeva, the Founder of SS WealthStreet, noted that there was a sharp rally in consumption-driven sectors such as FMCG, auto, tourism, and agri-related stocks, buoyed by the tax concessions aimed at stimulating domestic demand. Conversely, sectors like capital goods, defence, oil exploration, and railways experienced a sharp correction due to the lack of significant policy push or fresh allocations in the budget. Stocks to watch next week include insurance stocks, tourism stocks, FMCG stocks, aviation stocks, energy stocks, and leather and footwear stocks.
Market bears will also focus on stocks next week as the Union Budget 2025 did not meet scale expectations regarding infrastructural allocations, higher capex allocation, major banking or railway announcements, and other expansive plans.
